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Home , BeingGirl, Charmin, Ernesto Zedillo

1 92 90 90 1 S US US ST T A A II N AA B B I LI LI TT Y Y R R E EP PO OR TR T 2

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Statement of Purpose

We will provide products and services of superior quality and value that improve the lives of the world’s consumers.

As a result, consumers will reward us

with leadership sales, profit and value Sustainable development is a very creation, allowing our people, our simple idea. It is about ensuring a better quality of life for everyone, now shareholders, and the communities in and for generations to come. which we live and work to prosper.

his report was prepared in accordance with the Table of Contents T Global Reporting Initiative’s (GRI’s) Sustainability Reporting Guidelines on Economic, Environmental and CEO and Chairman’s Statement ...... 3 Social Performance, June 2000. The mission of the GRI is to promote international harmonization in the reporting of relevant and credible corporate Vision ...... 4 environmental, social and economic performance information to enhance responsible decision making. Executive Summary...... 5 GRI pursues this mission through a multi-stakeholder process of open dialogue and collaboration in the P&G Profile ...... 7 design and implementation of widely applicable sustainability reporting guidelines. GRI has not verified the contents of this report, nor does it take a Policies, Organization & position on the reliability of information reported Management Systems ...... 12 herein. For further information about the GRI, please visit: http://www.globalreporting.org Performance ...... 30 Generally Applicable and Relevant Indicators ...... 31 WWW Please visit P&G’s corporate Web site for the latest P&G news and Company-Specific Indicators ...... 38 shareholder and career information: http://www.pg.com Sustainability In Action ...... 44

FRONT COVER: Children gather outside a school supported by the Dash Goodwill Mission – School for Angola program. (see page 53)

CEO and Chairman’s Statement

he men and women of P&G share a deeply felt purpose: When downsizing becomes necessary, as it did this past Tto improve the lives of consumers in every part of the fiscal year, we manage employee separations in ways that world. One important way in which we fulfill this purpose is are consistent with our values and principles. We maintain through our commitment to the concept of sustainable focus and priority on our strong commitment to the diversity development, or sustainability, which we believe is integral of our organization. P&G uses a voluntary separation to both P&G’s future business success and to a truly better program to maximize voluntary attrition. The program, quality of life for all the world’s consumers Ð now and for which includes severance pay based on years of service, generations to come. continuation of health care benefits for the severance period, outplacement support services and a retraining allowance, Sustainability is an important way for us to leverage the provides a bridge for separating employees to retirement or power of innovation and global markets for the benefit of employment elsewhere. everyone Ð not just those in the developed world. We cannot condemn developing countries to a life of poverty so those These efforts have translated into improved competitiveness in the developed world can maintain their lifestyles. But by controlling costs and managing cash more effectively, neither do we have to presume that the only alternative is for and resulted in getting P&G’s business back on track and the developed world to reduce its quality of life. When we growing again. We’ve refocused on our biggest brands, in concede to such a notion, we erect barriers to progress. We our biggest markets, with our biggest customers. We’ve pit the developed and developing worlds against one strengthened the value of our brands for consumers. We’ve another and create an adversarial environment in which made strategic choices about which businesses P&G should there are opposing sides, not common purpose. As a be in and which it should not. result, progress stalls or moves only incrementally, and two-thirds of the world’s population continues to live on We have only just started down our road to sustainable the fringes of existence. development, but already we can see how P&G benefits when we improve the lives of the world’s consumers, now There is an alternative. It is based on the premise that we can and for generations to come. make markets work for everyone and ultimately make lives better in every part of the world. In this report, you will find many examples of P&G’s contributions to a better quality of life through the creation of new products, new markets and addressing new consumer needs. For example: ¥ pregnancy education to reduce maternal mortality A. G. Lafley ¥ Actonel for the treatment and prevention of President and Chief Executive postmenopausal osteoporosis ¥ dental hygiene education to improve oral health ¥ a partnership with UNICEF to combat tuberculosis

Another important issue we would like to address is how the global economic environment has impacted our business. Fiscal 1999/00 was a difficult year for P&G and for its many employees around the world. A strong plan was put in place to re-establish the balance between top-line revenue growth and bottom-line earnings growth. However, over the past John E. Pepper fiscal year, we continued to face a challenging economic Chairman of the Board environment, with a slowing U.S. economy and the possibility of a recession. Key economies around the globe were also slowing Ð Japan, some countries in Europe, some of the developing markets. In order to restore P&G’s ability to compete more effectively and to grow more consistently, the previous restructuring program was expanded to further reduce overhead costs, resulting in staffing reductions across the Company.

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Vision

rom the beginning, P&G’s embrace of Sustainable However, as we focus on building new top-line value FDevelopment has been based on our vision that for P&G, we have maintained our historical attention we can grow the business, shareholder and stakeholder to how we run our business Ð our health, safety and value of P&G by bringing to the marketplace environmental management, product safety programs innovations and technologies that address the and community relations efforts. In this year’s report, frustrations and aspirations of consumers at all levels you will see: of the economic pyramid. Since then, we have been on a steep learning curve in our attempt to bring ¥ P&G’s environmental compliance and employee sustainability to life for our business managers as well safety performance are at historical best levels as our external stakeholders. I want to share some of ¥ P&G was rated the No. 1 company in the non- our learnings with you. cyclical consumer products sector by the Dow Jones Sustainability Group Index Our first, and most important, learning came in our ¥ Business Ethics magazine rated P&G first in its efforts to define the concept of sustainability as a way annual list of 100 Best Corporate Citizens to ensure better quality of life for everyone, now and for generations to come. This is an effort on which we Our approach to sustainability is a simple but have been focused for two years, and we are enormously motivating way to think about our encouraged by how many people Ð in business, responsibility as a company. It is fully consistent with government and non-governmental organizations Ð are our Purpose, Values and Principles; thus, a perfectly not only embracing this concept, but also seizing upon natural way for us to behave. Living up to such a it to pursue common solutions, and not just common challenge can be difficult, but it is a challenge we problems. People relate to the idea of a “better quality embrace. And we are pleased to share our progress of life” at an emotional level. They have their own with you. ideas about what a better quality of life means for them and their children and for those less fortunate than themselves. At P&G, we now use this definition exclusively.

Our second learning was the importance of talking about sustainability as an opportunity, not an issue to George D. Carpenter be managed. We recognized this difference and Director, Corporate developed our approach to sustainability accordingly. Sustainable Development When meeting with our business leaders to discuss how sustainable development relates to their businesses, we stress the opportunity that flows from “ensuring a better quality of life.” When talking with external stakeholders, we share ideas on how to improve lives. We find people begin talking about creative solutions, new partnerships and new business opportunities that come from addressing the aspirations and problems of consumers all over the world. 5

Executive Summary

Key Sustainability Focus Areas Major Impacts Associated ur sustainability focus continues to be Water with Products and Services O and Health & Hygiene. We have chosen these two major areas as they are applicable across all of the Environmental Protection Company’s global business units and the core drivers • Resource Use (Materials and Energy) for sustainability: environmental protection, social • Water responsibility and economic development. While P&G • Waste and Emissions continues to focus on Water and Health & Hygiene, the Company will not forget its long tradition of: Social Responsibility ¥ Doing what is right for consumers, employees, • Health shareholders and communities where it operates • Hygiene ¥ Building sales and profit growth in a socially and • Education environmentally responsible manner ¥ Increasing diversity within its work force Economic Development ¥ Contributing to a more educated population • Shareholder Value ¥ Maintaining high standards of health, safety and • Employment environmental protection for its products and • Taxes, Fees and Contributions operations throughout the world

Financial Highlights (Millions of dollars except per-share amounts) 2000/01 1999/00 1998/99 Net Sales $39,244 $39,951 $38,125 Marketing, Research & Administrative Expenses $12,406 $12,483 $10,845 Income Taxes $1,694 $1,994 $2,075 Net Earnings $2,922 $3,542 $3,763 Basic Net Earnings Per Common Share $2.15 $2.61 $2.75 Total Assets $34,387 $34,366 $32,192 Long-Term Debt $9,792 $9,012 $6,265 Shareholders’ Equity $12,010 $12,287 $12,058

Philanthropic Contributions P&G and its employees have a long-standing commitment to being good citizens and neighbors in all the places where we do business around the world. We believe we have a responsibility to society to use our resources Ð money, people and energy Ð wisely. We show our financial commitment through support for a wide range of educational, health, social service, cultural, civic and environmental organizations. Worldwide, P&G has a corporate contributions system in place that coordinates contributions to local communities.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 6 Diversity Data — Global Enrollment P&G continues to focus on diversity as a global strategy and expects its work force to become increasingly more diverse. Global data on enrollment by gender are shown in the following table: Global Enrollment % Female 2000/01 1999/00 Management 34.5 34.1 All Other Employees* 38.0 39.3

* The category of “All Other Employees” continues to be an evolving global database as more of P&G’s plants are included. The database is expected to be complete by 2001/02. Changes in this category between 1999/00 and 2000/01 are reflective of the addition of more plant sites, which tend to have higher levels of male enrollment. The percentages of minority and female employees in the United States are shown in the following table: % Minorities % Female 2000/01 1999/00 1998/99 2000/01 1999/00 1998/99 Management 15.8 15.9 15.8 34.1 33.7 33.1 All Other Employees (Administrative, Technical and Plant Technicians) 18.4 18.8 18.5 38.8 39.7 39.9

Manufacturing Resource & Waste Summary All units are in thousands of metric tonnes unless otherwise noted. 1 tonne = 1,000 kg = 2,205 lbs. 2000/2001 Global Business Unit Details Measure Total Production 2000/01 1999/00 1998/99 BC BFFC FHC FB HC Product Shipped 15,808 13,936 13,269 893 3,510 8,248 2,179 978 Raw Materials from 208 476 380 0 208 0 0 0 Recycled Sources

Waste Generated Waste 910(830)* 879 863 57 472 140 214(134)* 27 Percent Recycled/Reused Waste 51% 55% 56% 34% 65% 62% 39% 54%

Disposed Waste Solid Waste — Non-Hazardous 376(296)* 317 271 27 199 29 113(33)* 8.0 Solid Waste — Hazardous 13 12 27 3.3 0.9 8.0 0.2 0.5 Effluents (Excluding Water) 36 39 31 3.7 7.4 11.1 11.2 2.1 Air Emissions 15 19 20 0.5 6.3 2.4 5.5 0.4

Other 5 Energy Consumption (10 GJ) 1,068 1,080 967 43 656 216 110 43 Water Consumption (MM cubic meters) 88.1 87.0 83.4 4.9 55.8 15.8 9.0 2.6 SARA Releases (1,000 tons)** 1.7 1.9 1.6 0.02 0.01 1.2 0.08 0.41

* Waste from process sources decreased. Total wastes would be 80,000 metric tonnes less if demolition wastes were excluded. ** Releases defined in the U.S. Superfund Amendments and Reauthorization Act by the U.S. Environmental Protection Agency. NOTE: BC - Beauty Care; BFFC - Baby, Feminine, & Family Care; FHC - Fabric & Home Care; FB - Food & Beverage; HC - Health Care

Occupational Health & Safety Data Summary of Violations and Past three years’ global data on two key metrics for Interventions worker health and safety: Past three years’ global data on environmental, Total Incident Rate transportation, and worker health and safety violations (injury and illness per 100 employees) and interventions: 2000/01 1999/00 1998/99 0.69 0.79 0.79 2000/01 1999/00 1998/99 Number 73 48 46 Total Lost Workday Case Rate Fines $77,070 $13,400 $33,250 (lost & restricted workday cases per 100 employees) 2000/01 1999/00 1998/99 The increases in fines and violations this year are 0.24 0.35 0.37 related to transportation of hazardous materials. 7

P&G Profile

markets approximately 250 brands of consumer products to nearly five billion consumers in more than 130 countries. The products include laundry detergents, toothpastes, shampoos, feminine hygiene products, pharmaceuticals, snacks, diapers, cosmetics and cold remedies. P&G products are best known by their brand names: Pampers, Tide, Ariel, Always, Whisper, Pantene, Bounty, Pringles, Folgers, Charmin, Downy, Lenor, Iams, Olay, Crest, Vicks and Actonel.

P&G’s worldwide headquarters is located in Cincinnati, Ohio, U.S. The Company has on-the-ground operations in more than 80 countries and employs nearly 106,000 people worldwide.

P&G is a publicly owned company. Its stock is listed and traded on the following exchanges: New York, Cincinnati, Amsterdam, Paris, Basle, Geneva, Lausanne, Zurich, Frankfurt, Brussels and Tokyo.

As of July 31, 2001, there were 1,090,000 Common Stock shareholders of record, including participants in the Shareholder Investment Program. Five billion shares of Common Stock have been authorized. About 1,295,738,000 shares were outstanding as of July 31, 2001.

This is the third Sustainability Report for P&G’s worldwide operations. Data in this report covers the period from July 1, 2000, through June 30, 2001. Financial information is given in U.S. dollars.

For more information on P&G’s geographical operations, please visit our Web site at: http://www.pg.com/about/news/world.htm WWW For more information on P&G’s investor information, please visit our Web site at: http://www.pg.com/investor For more information on P&G’s products, please visit our Web site at: http://www.pg.com/products/pg_products.jhtml?toolbar=/common/lbarmain.jhtml

Key Brands LENOR SUNNY DELIGHT Baby Care SKII MR. CLEAN SPIRE BABYSAN SECRET Fabric & Home Care TIDE ECLIPSE DODOT VIDAL SASSOON ACE BLEACH AND SWIFFER LUVS ZEST PREWASH Health Care PAMPERS ARIEL Feminine Care ACTONEL PAMPERS & LUVS Family Care BOUNCE ALWAYS ASACOL BABY WIPES BOUNTY CASCADE ALLDAYS BLEND-A-MED CHARMIN CHEER TAMPAX CREST Beauty Care PUFFS DASH WHISPER DIDRONEL COVER GIRL TEMPO DAWN IAMS IVORY DOWNY Food & Beverage MACROBID MAX FACTOR DRYEL CRISCO METAMUCIL OLAY ERA FOLGERS NYQUIL/DAYQUIL OLD SPICE FAIRY JIF PEPTO-BISMOL PANTENE PRO-V FEBREZE MILLSTONE SCOPE PERT PLUS JOY OLEAN VICKS FORMULA 44 REJOICE PRINGLES VICKS VAPORUB SAFEGUARD

Building for the Future Wm. Procter & $1 Million James Gamble, Net Sales Regional U.S. Founders, Candle 1859 Markets & Soap Business 1837 1850 1860 1870

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 8 Financial Information The Company reported net earnings of $2.92 billion, or $2.07 per common share, for the fiscal year ended June 30, 2001. Results included a charge of $1.475 million after-tax related to its restructuring program.

Core net earnings for the fiscal year increased to $4.40 billion, excluding the restructuring costs. Core net earnings per share were $3.12, an increase of six percent from the previous year. Fiscal year earnings grew due to volume and sales progress partially offset by higher spending behind new initiatives. Net sales were $39.24 billion, down slightly from last year. Excluding a three percent exchange rate impact, net sales increased two percent on flat unit volume.

Common share dividends were $1.40 per share in 2001. For the coming year, dividends will increase nine percent to $1.52 per common share, marking the 46th consecutive year of increased common share dividend payments.

s part of P&G’s restructuring initiative to optimize Aresources to fit a growing global business and to accelerate innovation and growth, the Company began operating its business through Global Business Units (GBUs). ¥ Global Baby, Feminine, & Family Care ¥ Global Fabric & Home Care ¥ Global Beauty Care ¥ Global Health Care ¥ Global Food & Beverage

Net Sales by Global Business Units (Millions of dollars) 2000/01 1999/00 1998/99 Baby, Feminine, & Family Care $11,991 $12,044 $12,190 Fabric & Home Care $11,660 $12,157 $11,415 Beauty Care $7,257 $7,389 $7,376 Health Care $4,353 $3,909 $2,876 Food & Beverage $4,139 $4,634 $4,655 Corporate $(156) $(182) $(387) Total $39,244 $39,951 $38,125

Building for the Future, continued... P&G Brand Profit Incorporated Beginning P&G Advertising Sharing Company of P&G Shortening & Canada Code of 1882 1887 1890 Research & Oils Business Markets Regulations Development 1880 1890 1900 1910 1920 9 Major Acquisitions Acquisitions accounted for as purchases in 2000/2001 totaled $171 million. They include: Dr. Johns SpinBrush Moist Mates P&G purchased Dr. Johns Products, Ltd., makers of P&G purchased Moist Mates Ð the Dr. Johns SpinBrush Ð a high-performance battery- a moist, flushable bath tissue operated toothbrush priced within a dollar or two of on a roll Ð from Moist Mates manual brushes. LLC. The deal included brand inventories, patents and Launched in late 1999, the SpinBrush trademarks. had done no consumer advertising until the summer of 2001, instead driving P&G relaunched Moist Mates sales through positive word-of-mouth under the name Charmin Fresh from consumers, dentists and retailers. Mates and began distributing the product in July 2001 Its success comes despite the fact that the in a regional market covering the southeast and mid- product is still not fully available through Atlantic states. all major retail chains. Charmin’s research found that more than 60 percent of The SpinBrush acquisition will double the size adult consumers have tried some alternative form of of P&G’s toothbrush business and fit well with moist cleaning including: sprinkling water on dry Crest’s mission of providing consumers with toilet paper, using baby wipes or wetting a washcloth. meaningful advances in oral health and hygiene. Charmin Fresh Mates gives consumers a soft, moist, flushable bath tissue in a familiar, easy-to-use format SpinBrush’s patented design features both Ð a roll. stationary and high-speed oscillating bristles, enabling people to use the manual brushing motion Charmin Fresh Mates is the perfect companion to they are used to while providing the enhanced regular Charmin bath tissue. Together, these products benefits a powered brush can deliver. The SpinBrush offer consumers a convenient way to choose dry, comes in three versions Ð adult, youth and child. moist or both. The Charmin Fresh Mates starter kit includes one roll of moist tissue with a dispenser that To celebrate this announcement, Crest and Dr. Johns is convenient and lightweight and hangs directly from donated 10,000 children’s SpinBrushes to charity. The most existing dry-roll holders. Charmin Fresh Mates brushes went to needy children through the Toys for refills are sold separately. Tots campaign and Crest’s Healthy Smiles program.

Major Divestitures Divestitures accounted for as sales in 2000/2001 totaled $717 million. They include: ¥ Biz ¥ Clearasil / Biactol ¥ Spic and Span / Cinch

External Recognition Below is a list containing some of the key awards and recognition received by the Company over the past year: Corporate Awards ¥ 10th in second annual Reputation Quotient Study ¥ Dow Jones Sustainability Group Index, Market conducted by Harris Interactive Inc. and The Sector Leader-Consumer, Non-Cyclical (see page 11 Reputation Institute for more details) ¥ P&G Singapore received Corporate Gold Award ¥ 1st on 100 Best Corporate Citizens rating, Business 2000 (see page 51 for more details) Ethics Magazine, 2001 (see page 11 for more details) ¥ National Osteoporosis Foundation Corporate ¥ P&G Thailand named first winner of Good Corporate Leadership Award Governance and Internal Audit Award 2000 continued on next page...

Building for the Future, continued... Beginning of Safety Philippines Tide Overseas First Disposable P&G Market Program and U.K. Synthetic Introduced Division $1 Billion Fluoride Diapers Research Started Markets Detergents 1946 1948 Net Sales Toothpaste Business 1955 1920 1930 1940 1950 1960 Oral Care 1965 Business Affirmative Action

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 10 continued from previous page... ¥ 2nd in Best Employers to Work For in India study ¥ 13th in World’s Most Respected Companies list conducted by Business Today Magazine published by the Financial Times ¥ 4th Most Admired Company in Spain published Brand Awards annually by the leading Spanish financial magazine, ¥ Kazakhstan’s Choice of the Year 2000 Award for Best Actualidad Económica Shampoo (Pantene Pro-V) and Best Detergent (Ariel) ¥ Top 15 Responsible Corporate Citizens in India and Best Producer of Hygiene Products reported in the Confederation of Indian Industry ¥ Marketing Intelligence Service’s Annual Build a quarterly publication, Green Business Opportunities Better Mousetrap report selected three P&G products ¥ P&G received the Ohio 2001 Minority Business Ð Impress Ultimate Sealing Wrap, Crest Whitestrips Development Award (see page 43 for more details) Dental Whitening System and Swiffer WetJet Hard ¥ P&G named to Working Woman Magazine’s Floor Cleaning System Ð among its Top 10 Inaugural Supplier Diversity List in recognition of its Innovative Products of 2000 diversity initiatives, particularly in the area of ¥ Swiffer named Product of the Year 2000 by German furthering the growth and success of minority and consumers in the trade magazine, Lebensmittel women entrepreneurs Praxis (Food Practice) ¥ P&G awarded the 2000 Corporate Circle Award by ¥ Pantene Essentials wins “T” Award from Telva the U.S. National Medical Association for its role in magazine and Prix d’Excellence from Marie Claire the national effort to facilitate the development, magazine, two of the most prestigious awards in dissemination and use of state-of-the-art biomedical Spain’s beauty world knowledge for improved therapeutics in African- ¥ Sunny Delight recognized as One of the 100 Best American patients Ideas of 2000 by the leading financial magazine in ¥ P&G named to the Forbes Magazine 40 List for its Spain, Actualidad Económica efforts in developing strategic alliances and ¥ Sunny Delight and Pringles recognized among the partnerships that spur growth and innovation and 10 Initiatives of the Year by the leading Spanish serve customers better distribution magazine, Distribución Actualidad ¥ P&G named Supplier of the Year and winner of the ¥ Downy Wrinkle Releaser’s “Wrinkle Free Laundry Best New Product Award for Swiffer by the Week” won the Silver Anvil for Excellence in Australian grocery industry Marketing Consumer Products Packaged Goods ¥ For All Kids Foundation White Rose Award ¥ The “Tampax Total You Tour Ð Cultivating a presented by U.S. talk show host Rosie O’Donnell Relationship” received its second Silver Anvil for honored P&G’s Chairman, John Pepper, and his wife, Excellence in Multicultural Business Relations Francie, for their leadership and dedication to helping ¥ P&G received recognition by the Chilean Health children and families in need over many years. Crest Ministry for deployment of the Pampers Institute and sponsored this year’s event as part of the launch of Hospital Program the new Crest Healthy Smiles 2010 Program (see ¥ Brazil’s Ace Detergent received the Golden Lion page 49 for more details) Award in the Stunts/Events (Media) Category at the ¥ P&G received the annual Hunger Hope Award 2000 48th annual Cannes International Film Festival from America’s Second Harvest, which recognizes those who support their effort to end hunger in Environmental Awards America ¥ 7th in the Index of Corporate Environmental Engagement and Performance, organized by the Employee Awards U.K.’s Business in the Environment ¥ Fortune Magazine Best Companies for Asians, ¥ P&G Cosmetics received Businesses for the Bay Blacks and Hispanics 2001 Significant Achievement Award for successful ¥ Hispanic Magazine Top 100 Corporations to Work modifications made to its Hunt Valley, Maryland, For 2001 and Corporate Elite Award 2001 U.S., production facility (see page 37 for more ¥ The Vault Report, a popular career-help Web site that details) reviews companies for best places to work, ranks P&G ¥ P&G Paper won Wisconsin’s Manufacturer of the Year among the Top Ten Places for Minorities to Work award for productivity improvements at the Green Bay ¥ The LATINA Style Magazine again selected P&G to facility its Style 50 List, which recognizes the top 50 U.S. companies providing the best professional WWW For more information on awards received opportunities for Latinas by P&G, please visit our Web site at: ¥ 11th on Top 35 Best Companies to Work For in http://www.pg.com/about_pg/overview_facts/ Canada, published annually by the Globe and Mail’s awards_recognition.jhtml Report on Business magazine Building for the Future, continued... Environmental Toll-free Feminine Statement World Opportunity Future Dow Jones Audit Consumer $10 Billion Protection of Environment 2000 Shares Sector Leader Program Hotline Net Sales Businesses Purpose Center Award Award 1998- & 1987 1992 1994 2001 Business 1970 1980 1990 2000 Ethics 1993 Ranked #1 1st Annual Global 2001 Environment Report 11 Dow Jones Rates P&G as Market Sector Leader P&G was awarded the top rating for sustainability these two areas.” It recognizes how P&G has in consumer, non-cyclical products in the 2000 Dow carefully defined its key stakeholders Ð consumers, Jones Sustainability Group Index (DJSGI). This communities, employees, shareholders, suppliers, recognition, by an independent body, is retailers, etc. Ð and created a dialogue with them Member of an acknowledgement of the efforts and through regular information, educational programs, Dow Jones SustainabilityGroup Index strategies P&G implemented over the meetings, etc. past year to drive sustainability within 2000 its business and assessing and The DJSGI is a product of Dow Jones and the SAM communicate the economic, social and Sustainability Group (Switzerland) and is currently environmental impacts of its products and services. licensed to 17 financial firms in eight countries. The P&G was the top rated company in the Consumer, index is created by starting with the 2000 largest Non-Cyclical market sector. companies in the Dow Jones Group Index. Each of these is rated on a set of sustainability criteria, and the In awarding P&G the top rating, the Index made top 10 percent are included in the DJSGI. As part of reference to the Company’s deliberate strategies and each year’s launch, the top companies are featured. actions. In particular, the P&G focus on personal health and hygiene and the reduction of water usage You can access the profile on P&G and pollution were acknowledged. In its summary, in .pdf format at: the report notes that “the company’s approach is to WWW http://www.pg.com/content/pdf/ increase shareholder value by contributing solutions 01_about_pg/corporate_citizenship/ to problems, needs and concerns associated with sustainability/2000DJSGIPGBIO.pdf

Business Ethics Rates P&G 2 0 0 1 S U S T A I N A B I L I T Y Best Corporate Citizen R E P O R T P&G was named No. 1 by Business Ethics Magazine in its article “100 Best Corporate Editor: Corey Snyder, Cincinnati, Ohio, USA Citizens for 2001; America’s Most Profitable and Core Report Team: Chris Smith, Newcastle Socially Responsible Major Public Companies.” In upon Tyne, U.K.; Debbie White, Cincinnati, Ohio, USA; Courtney Dressler, awarding the No.1 ranking to P&G, Business Cincinnati, Ohio, USA; Mary Kay Morris, Ethics noted the Company’s service to Cincinnati, Ohio, USA; Bea Buyle, international stakeholders, especially its generosity Brussels, Belgium; Paul van der in international grants and gifts in several Mensbrugghe, Brussels, Belgium; Taki communities. This includes earthquake relief in Arakaki, Kobe, Japan; Joaquin Zepeda, Turkey, community building projects in Japan, Caracas, Venezuela. plus contributions for schools in China, school Design: Andy Ruttle, Ruttle Design Group, Inc., computers in Romania, special education in Cincinnati, Ohio, USA. Malaysia and shore protection in France. The report team wishes to thank all the individuals throughout the Company who contributed informa- Business Ethics first introduced a ranking of the tion, stories and data to this report. 100 Best Corporate Citizens in 1996, using data Contact: gathered by in-house researchers. The 2000/2001 Keith Zook list was compiled using a new methodology from Corporate Sustainable Development the previous years’ lists. The new methodology 2 Procter & Gamble Plaza uses the database compiled by the leading social Cincinnati, Ohio 45202 research firm, Kinder, Lydenberg, Domini and Co., Inc., which collects and synthesizes data on a wide Fax: (513) 983-5226 array of stakeholder topics for more than 650 top E-mail: [email protected] public U.S. companies.

For the complete story, please visit: P&G’s 2000 Sustainability Report can be found WWW http://www.business-ethics.com/ at: http://www.pg.com/content/pdf/ 100best.htm#Cover Story WWW 01_about_pg/corporate_citizenship/ sustainability/reports/ sustainability_report_2000.pdf

P&G’s 2001 Sustainability Report can be WWW found at: http://www.pg.com/sr

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Policies, Organization & Management Systems

ustainable development is about Simproving quality of life for everyone, now and for generations to come. P&G contributes to this directly by providing products and services that improve the lives of consumers, whether in terms of health, hygiene or convenience. Through our activities we also contribute to the economic and social well- being of a range of other stakeholders, including employees, shareholders, local communities in which we operate, and more widely to regional, national and international development. So P&G contributes to sustainable development both through what we do and how we do it.

How we do it includes ensuring we address any environmental and socioeconomic issues associated with our products and services. This is achieved by ensuring that the whole Company works within an agreed set of management systems and policies. Central to P&G’s organization are our Principles, Values and Statement of Purpose. These act as guidance for the development of our entire organizational structure, wherever we are in the world. This year we have made further improvements to a number of policies, including vendor selection guidelines, child labor policy and our global Health, Safety and Environment (HS&E) systems.

Statement of Purpose We will provide products and services of superior quality and value that improve the lives of the world’s consumers. As a result, consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper. 13 Values P&G is its people and the values by which they live.

P&G People Integrity We attract and recruit the We always try to do the right finest people in the world. We thing. We are honest and build our organization from Leadership Ownership straightforward with each within, promoting and PEOPLE other. We operate within the rewarding people without regard letter and spirit of the law. We to any difference unrelated to Passion uphold the values and principles performance. We act on the Integrity for of P&G in every action and Winning conviction that the men and decision. We are data-based and women of P&G will always be our Trust intellectually honest in advocating most important asset. proposals, including recognizing risks.

Leadership Passion for Winning We are all leaders in our area of responsibility, with a We are determined to be the best at doing what deep commitment to deliver leadership results. We matters most. We have a healthy dissatisfaction with have a clear vision of where we are going. We focus the status quo. We have a compelling desire to our resources to achieve leadership objectives and improve and to win in the marketplace. strategies. We develop the capability to deliver our strategies and eliminate organizational barriers. Trust We respect our P&G colleagues, customers and Ownership consumers and treat them as we want to be treated. We accept personal accountability to meet the We have confidence in each other’s capabilities and business needs, improve our systems and help others intentions. We believe that people work best when improve their effectiveness. We all act like owners, there is a foundation of trust. treating the Company’s assets as our own and behaving with the Company’s long-term success in mind.

J. Floyd Byrd (1922 – 2000) 1974. These are On December 29, 2000, J. Floyd Byrd, founder of only a few of his Environmental Control at P&G, passed away of many accolades. heart failure after 78 short years. After World War II, He was indeed he returned to the University of Cincinnati, highly respected graduating in 1948 as a chemical engineer. He then in his work and came to P&G and began a 41-year tenure. He retired as a person. in 1989 as Manager of Environmental Affairs. Eight years of full-time consulting followed; full time for Floyd authored numerous articles on the environment Floyd consisted of 60 - 70 hours a week. and responsible pollution control. Many were published and award winning. In 1969, he received the Floyd was a rare blend of conservationist and F. H. Warring Award from the Ohio Water Pollution industrialist. He brought pragmatism to both sides. Control Association for contributions in industrial He truly was a devoted custodian of our environment. waste control, and in 1985 he received the Environmental Regeneration Award for Distinguished Floyd was the recipient of many awards and Leadership in Environmental Protection given by the important appointments. He was designated an Rene Dubois Center for the Human Environment. official observer to the first United Nations “Man & His Environment” conference, held in Stockholm, Floyd was president of the Water Environment Sweden, in 1972. He served on the National Federation and was a co-founder of the Ohio section Academy of Science & Engineering Committee of of the Sierra Club. Floyd was a teacher. Whether it Water Quality Management. He received a was Eskimo rolls in a kayak or the disciplines of University of Cincinnati distinguished Alumni environmental engineering, he taught, coached, Award in 1973 and was selected Engineer of the mentored, encouraged and gave people the freedom to Year by the Engineering Society of Cincinnati in achieve their highest potential.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 14 Principles These are the Principles and supporting behaviors which flow from our Purpose and Values.

We Show Respect for All Individuals We are Externally Focused ¥ We believe that all individuals can and want to ¥ We develop superior understanding of consumers contribute to their fullest potential. and their needs. ¥ We value differences. ¥ We create and deliver products, packaging and ¥ We inspire and enable people to achieve high concepts that build winning brand equities. expectations, standards and challenging goals. ¥ We develop close, mutually productive ¥ We are honest with people about their performance. relationships with our customers and our suppliers. ¥ We are good corporate citizens. The Interests of the Company and the Individual are Inseparable We Value Personal Mastery ¥ We believe that doing what is right for the business ¥ We believe it is the responsibility of all individuals with integrity will lead to mutual success for both to continually develop themselves and others. the Company and the individual. Our quest for ¥ We encourage and expect outstanding technical mutual success ties us together. mastery and executional excellence. ¥ We encourage stock ownership and ownership behavior. We Seek to be the Best ¥ We strive to be the best in all areas of strategic We are Strategically Focused in Our Work importance to the Company. ¥ We operate against clearly articulated and aligned ¥ We benchmark our performance rigorously versus objectives and strategies. the very best internally and externally. ¥ We only do work and only ask for work that adds ¥ We learn from both our successes and our failures. value to the business. ¥ We simplify, standardize and streamline our current Mutual Interdependency is a Way of Life work whenever possible. ¥ We work together with confidence and trust across functions, sectors, categories and geographies. Innovation is the Cornerstone of Our Success ¥ We take pride in results from reapplying others’ ¥ We place great value on big, new consumer ideas. innovations. ¥ We build superior relationships with all the parties ¥ We challenge convention and reinvent the way we who contribute to fulfilling our Corporate Purpose, do business to better win in the marketplace. including our customers, suppliers, universities and governments.

P&G’s Newest Board Members The P&G Board of Directors recently elected two new members, Ernesto Zedillo Ponce de Leon and Domenico DeSole.

Dr. Zedillo was president of Mexico from 1994-2000. “We are delighted to welcome Ernesto Zedillo to our board,” said John Pepper, Chairman of the Board. “He is a distinguished leader and economist. He drove unprecedented growth during his six years as president of Mexico. His vast experience in social, economic and trade issues will add great depth and insight to our board.”

Mr. DeSole is president and chief executive officer of Gucci Group N.V. and chairman of the Group’s management board. “Domenico is a disciplined and dynamic business leader with strong experience in building global brands,” said Mr. Pepper. “He brings to us a unique combination of financial and marketing experience that has propelled Gucci to renewed record growth during the past decade.” 15 Policies These are the policies that support our Purpose, Values and Principles.

Child Labor And Worker Exploitation Policy P&G does not use child or forced labor in any of our global operations or facilities. We do not tolerate unacceptable worker treatment such as the exploitation of children, physical punishment or abuse, or involuntary servitude. We expect our suppliers and contractors with whom we do business to uphold the same standards. Should a pattern of violation of these principles become known to the Company and not be corrected, we will discontinue the business relationship. LINK For more information, please click for full details.

Project Hope P&G China is a strong supporter of Project Hope, a national organization that builds schools in rural Chinese communities, many of which have no schools. P&G donated a total amount of RMB12 million (approximately $1.45 million) to Project Hope, building more than 70 “P&G Hope Schools” around China and bringing thousands of children in poor rural areas back to schools.

Our Values and Code of Conduct As an important part of our Corporate Social Responsibility program, we have released a publication, Our Values and Code of Conduct.

This booklet provides sustainable development guidelines for business conduct that are based on P&G’s Purpose, Values and Principles. These key elements are of utmost importance for the proper conduct and respect for all individuals in the quest for common prosperity.

Guidelines for Vendor Selection We have developed a publication, Sustainability Guidelines for Vendor Relations.

This document shares what we expect from our vendors in terms of business conduct and what our vendors can expect from us. It explains that the foundation of our vendor selection guidelines is our Statement of Purpose, Values and Principles.

We operate within the spirit and letter of the law and maintain high ethical standards wherever we conduct business. We will actively seek

http://pg.com/about_pg/corporate/sustainability/ WWW substain_catmain.jhtml

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 16 The Global Sullivan Principles P&G supports the Global Sullivan Principles for corporate social responsibility and is one of the founding members.

The objectives of the Global Sullivan Principles are to support economic, social and political justice by companies where they do business; to support human rights and to encourage equal opportunity at all levels of employment, including racial and gender diversity on decision-making committees and boards; to train and advance disadvantaged workers for technical, supervisory and management opportunities; and to assist with greater tolerance and understanding among peoples, thereby helping to improve the quality of life for communities, workers and children, with dignity and equality.

WWW For more information on the Global Sullivan Principles, visit: http://www.globalsullivanprinciples.org

Reverend Leon Sullivan (1922 - 2001) On April 24, 2001, P&G lost a friend, and the world lost a tireless advocate “for the little people” when the Reverend Leon Sullivan passed away from leukemia at the age of 78. He will be remembered by more than three million people in 17 countries who have received job training through his Opportunities Industrialization Centers, which were founded in 1964.

In 1971, he became the first African-American to serve on a major corporate board when he was elected director of the General Motors Corporation, where he served for 20 years. In 1977, he created the Sullivan Principles, a code of conduct for companies operating in South Africa, which are now acknowledged as one of the most effective efforts leading to the elimination of apartheid. In 1983, he founded the International Foundation for Education and Self Help which launched programs to train teachers and bankers in Africa, build schools, establish micro-credit institutions for debt relief through the People’s Investment Fund for Africa, and hold the ongoing series of African/African-American summits.

In the late 1990s, he brought together world and business leaders to create the Global Sullivan Principles for corporate social responsibility, which were formally launched with Secretary General Kofi Annan at the United Nations in 1999. P&G is proud to have been part of the effort to create the Global Sullivan Principles for corporate social responsibility and to be one of its charter supporters. We remain committed to their success.

Executive Compensation Compensation for executives is based on the measures, including business results and developing principles that compensation must (a) be organizational capacity. In addition, executives are competitive with other high-quality companies in expected to uphold the fundamental principles order to help attract, motivate and retain the talent embodied in the Company’s Statement of Purpose, needed to lead and grow P&G’s business; (b) Values and Principles plus the Environmental Quality provide a strong incentive for key managers to Policy. These include a commitment to integrity, doing achieve the Company’s goals; and (c) make prudent the right thing, maximizing the development of each use of the Company’s resources. P&G has an individual, developing a diverse organization, and excellent record of recruiting, retaining and continually improving the environmental quality of developing its executive talent from within, an our products and operations. In upholding these achievement few other corporations have matched. objectives, executives not only contribute to their own success, but also help ensure the Company’s business, Executive compensation is based on performance employees, shareholders and the communities in against a combination of financial and non-financial which we live and work will prosper. 17 Diversity Policy resident and Chief Executive A.G. Lafley has Railroad Freedom Center, and senior management Paccelerated the Company’s focus on the currently provides leadership in a variety of advancement of diversity as a business strategy community organizations such as the African- platform and increased commitment to targeted multi- American Chamber of Commerce and the Hispanic cultural marketing. In a letter to all P&G employees, Chamber of Commerce. Individually, P&G employees Mr. Lafley stated: support such initiatives as the United Negro College “In the end, winning will come from taking Fund (UNCF) and is the No. 1 company nationally in full advantage of our diversity. Let’s harness the UNCF employee campaign. the full power of our organization so we can out-think… out-innovate… and out-perform P&G believes that diversity is a matter of ethics. our competitors. Every time.” Every individual in the Company Ð and every partner with whom we do business Ð deserves an equal P&G executive leadership has also increased opportunity to grow, excel and succeed with P&G. emphasis on diversity accountability. A Corporate Our values begin with “Respect for the Individual.” Diversity Leadership Council will shortly be Our commitment to diversity is a very tangible way appointed to evaluate strategies and progress we put that value into practice. toward achieving diversity goals. One-to-one diversity reviews with the chief executive and each Putting Our Values into Practice top business leader will link diversity performance Senior executives conduct in-depth diversity reviews to ratings, promotions and stock options. annually with organization heads. The annual corporate diversity reviews assess diversity progress Over the past five years, P&G has doubled the and leadership accountability across business units. number of women and U.S. minorities at the vice Each organization establishes diversity goals, president/general manager level. Recently, two considered one of the key measures in achieving African-Americans, Pamela L. Page and Albert H. overall business results. St. Clair, were promoted to vice president. P&G has also added Ernesto Zedillo Ponce de Leon, A.G. Lafley and Al Collins, Manager-Global former president of Mexico, to its board of Diversity, have communicated an aggressive diversity directors. Mr. Zedillo adds tremendous stature and strategy for 2001 that focuses on leadership and a different cultural perspective. accountability. This strategy focuses on representation at all levels in the Company and building a work Externally, P&G provides continuing leadership in the culture that allows every employee to contribute to his advertising industry by partnering with its agencies to or her fullest. Support systems for this plan include: refer qualified applicants to them and help ¥ Establishment of a Corporate Diversity Leadership disadvantaged minorities gain entry to commercial Council production companies. Internally, P&G supports ¥ One-to-one diversity reviews with each top corporate network teams and formal training programs executive and the chief executive conducted by internal and external diversity experts. ¥ Linking diversity performance to stock options for the top 30 managers P&G is committed to helping its minority suppliers ¥ Highest ratings and promotion of business unit prosper. With one of the oldest minority supplier leaders are measured against strong performance in programs, P&G U.S. has increased purchases from leading and supporting diversity. minority suppliers from $44,000 in 1972 to $548 million in 2000. The P&G Fund, the Company’s The role of the Corporate Diversity Leadership philanthropic fund, provides more than $15 Council is to increase employee trust in leadership million for educational programs, institutions commitment to diversity. The Council’s and materials each year, with $4.5 million in responsibilities include evaluating strategies and 2000 to nonprofit organizations that primarily progress toward achieving goals, recommending benefit women and minorities. Many of those global strategies/actions for leveraging diversity as a programs are further enhanced by the competitive advantage and providing perspective on commitment of P&G volunteer support. emerging issues.

P&G’s Executives-on-Loan program supports such LINK For more information on diversity, national initiatives as the U.S. National Underground please click for last year’s report.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 18 Data Privacy Policy ¥ P&G has qualified for the Safe Harbor, which Because P&G believes in protecting the privacy of allows for the transfer of personal information personal information, we treat information provided from European countries to the United States by an individual as that individual’s, entrusted to based on principles negotiated between the U.S. P&G. We inform people about the use and handling of Department of Commerce and the European data they provide us. Our privacy policy applies Commission. globally, and we follow applicable local data privacy laws and regulations. When other companies are For more information on Safe Harbor, handling personal information on our behalf, we WWW visit http://www.export.gov/ require them to abide by our privacy practices in the safeharbor/ handling of that data. ¥ P&G provides leadership for industry privacy Examples of our commitment to data privacy include: initiatives such as BBBOnLine and the Privacy ¥ Eighty P&G Web sites in North America have been Leadership Inititiative. awarded the Better Business Bureau’s BBBOnLine privacy seal. For more information on the Privacy WWW Leadership Initiative, visit http:// For more information on BBBOnLine, visit www.understandingprivacy.org WWW http://www.bbbonline.org

For more information on P&G’s Privacy Policy, visit: WWW http://www.pg.com/privacyprinciples.jhtml

Animal Welfare Animal welfare is important to P&G. We are We believe the development of alternatives to animal committed to the ultimate elimination of laboratory research makes good scientific, ethical and business testing using animals. sense. We have invested more than $120 million in the development of alternatives that are helping to reduce, P&G no longer uses animals in evaluating the safety refine and replace the need for animal tests. of our non-food, non-drug consumer products, except when required by law. Animal research may still be For more information on P&G’s product safety necessary to evaluate the safety of novel ingredients testing, please visit our Web site at: WWW and new-to-the-world product types for which no http://www.pg.com/animalalternatives. validated non-animal tests are currently available.

P&G Scientist Awarded Animal Welfare Prize Three scientists have been awarded Europe’s The SmithKline Beecham Laboratory Animal Welfare premier laboratory animal welfare prize for 2000, Prize is awarded annually by the Research Defence The SmithKline Beecham Laboratory Animal Society for significant contributions to improving the Welfare Prize. Dr. Frank Gerberick of P&G, Dr. welfare of animals in laboratories or techniques that Ian Kimber of Syngenta CTL and Dr. David reduce the number of animals required. The prize Basketter of Unilever Research worked together rewards achievements in the three Rs Ð reduction, to develop a test for the potential of chemicals to refinement or replacement Ð which are the guiding cause allergic skin reactions, or skin sensitization. principles of modern laboratory animal science and The new test provides an alternative to the welfare. The SmithKline Beecham Laboratory Animal established guinea pig tests and requires the use Welfare Prize, sponsored by SmithKline Beecham of far fewer animals. It also provides robust Pharmaceuticals, is the largest laboratory animal welfare objective and quantitative data, which are more prize in Europe. It is awarded to an individual or group readily understood by other laboratories. The data working in Europe for “contributions to improvements generated provides a much sounder basis for the in the welfare of animals in laboratory procedures or ultimate development of non-animal models, a recommendations or techniques that reduce the number target scientists continue to strive for. of animals required for laboratory procedures.”

WWW For more information, go to: http://www.rds-online.org.uk 19 Environmental Quality Policy We will provide products and services of superior quality and value that improve the lives of the world’s consumers. As a part of this, P&G continually strives to improve the environmental quality of its products, packaging and operations around the world. For more information on the LINK Environmental Quality Policy, please click for last year’s report.

Climate Change Policy Company will continue its implementation of energy P&G is concerned about the potentially negative conservation and efficiency. consequences of climate change and believes that growing scientific evidence, substantiating links of If current predictions are correct, the social and greenhouse gases to global climate change, warrants economic costs of addressing global climate change will prudent and cost effective action. We support efforts be high, with different countries affected to different to deal with the issue under the U.N. Framework degrees. Therefore, we strongly support continued Convention on Climate Change (UNFCCC) and scientific efforts to understand the causes, consequences encourage all nations involved to search for consensus and potential remedies for the negative effects of climate solutions under the UNFCCC. change. This understanding is critical to ensure the international community takes not only appropriate and Relative to other businesses, P&G is not an energy positive action, but action which provides the maximum intensive company. Thus, any voice we have in the flexibility, in both international agreements and in policy debate will be minor. However, we accept national regulations. This flexibility is essential to responsibility for understanding the potential minimize negative economic and social impacts on contributions of greenhouse gases from our business countries, on individual businesses and ultimately on the and taking prudent and cost effective actions. The general public.

Family Care Energy Reductions P&G’s manufacturing sites focus on energy the incoming river water. The project has been reductions through loss analysis. This past year in enormously successful. The amount of steam the United States, the Green Bay, Wisconsin, site required to heat the incoming river water decreased made great strides in reducing the energy required to by 18.1 metric tonnes per hour, and the energy heat incoming river water. During a loss analysis required to dry the paper was reduced slightly. meeting, the team identified an opportunity to Capital costs for improved solids removal, pumps, recover the heat which is lost through water piping and the heat exchangers totaled $2.5 million. (effluent) discharged to the local publicly owned Estimated annual savings equal $1.5 million. These treatment works (POTW) and the Fox River. The figures equate to a payback of less than two years site evaluated the potential savings by transferring for the capital investment, which is a great deal for this heat to incoming river water used in the the environment and the Company. papermaking process. To accomplish this task, the team determined they would need to decrease the Green Bay’s successful project has potential amount of solids in the wastewater discharged to the reapplication at other sites. All Family Care sites POTW in order to route the effluent flow through a continue to address energy reductions through their plate and frame heat exchanger. The water treated loss analysis program. Examples of other energy on-site for direct discharge to the Fox River was savings projects include optimizing airflow on paper already suitable for heat recovery. machines, adding steam traps to improve steam condensate recovery, using alternative fuels such as Project scope involved installing equipment to peanut hulls and waste paper fiber for energy recover more solids from the POTW effluent stream, production, and using gas turbines for co-generation transferring the heat from both effluent streams to of electricity and energy for drying paper.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 20 Coastal Cleanups Foundation for Seashore Protection Oxnard Beach Cleanup hrough the Fondation d’Entreprise P&G France In the United States, the Oxnard, California, paper Tpour la Protection du Littoral (Foundation for plant formed a strong environmental partnership Seashore Protection), the Conservatoire du Littoral and with the city of Oxnard about five years ago. The P&G have joined forces in a project to protect the city contacted the plant to help coordinate a environment of coastal areas over the long term. The hazardous waste collection event. The city was in Conservatoire du Littoral, part of the French Ministry the process of constructing a waste collection/ of Environment, is chartered to safeguard the French transfer station, and P&G’s large parking lot worked coastline by protecting its natural sites and maintaining as a perfect location for the event. the ecological balance. It purchases plots of land and restores them so they can be opened to the public. Following the success of several hazardous waste Today, the Conservatoire is one of the largest land collection events, the plant became involved in the owners of coastal areas in France (10 percent of the “Adopt a Beach” program. Local community groups French coastline). and businesses agree to “own” a certain stretch of public beach and make several trips per year to keep The P&G Foundation provides the Conservatoire with the beach clean. The city of Oxnard provides a additional means to enhance its knowledge of the dumpster, and the California Coastal Commission natural maritime environment through: provides the trash bags. ¥ Financing basic research ¥ Amplifying and diversifying communication The Oxnard plant owns the Mandalay beach, and ¥ Implementing pioneer projects employees visit the beach three times per year to collect trash. This effort leads to a win for the In 1992, P&G France pledged to provide FF 1 million environment and a win for the local community. (or $150,000) per year during an initial five-year period, which was renewed for an additional five Argentina Coastal Cleanup years, until 2002. P&G Argentina has sponsored, for the third consecutive year, a coastal clean-up drive led by a The partnership has provided important research, local environmental nongovernmental organization including: (NGO) called RECREAR. This NGO links efforts ¥ A study of the forests of the Mediterranean with the U.S. Center for Marine Conservation. coastline, which aims at identifying the best About 6,000 students under the supervision of their methods to protect Conservatoire lands and teachers carried out the actual cleanup. In addition to implement restoration after the frequent fires in identifying and collecting the debris, the students the area classified it by composition to understand its origin ¥ A scientific study listing botanical species on all and develop a prevention plan for the future. The Conservatoire lands, resulting in a proposal of cleanup work was carried out on coasts, lakes and appropriate management methods to protect and the Rio de la Plata river in the Provinces of enhance the botanical heritage Buenos Aires (Vicente Lopez, Quilmes, San ¥ Inventory of the fauna on the lands belonging to the Isidro, Mar de la Plata), Chubut (Puerto Conservatoire, the study leading to the proposal of Piramide) and Rio Negro (Barriloche). new ways of managing the fauna ¥ A major sociological study, “The French and the Coast,” which assessed the opinion of real and potential users of the Conservatoire’s lands

The Foundation also provides effective communication through publications, scientific symposia and educational programs. Currently, an Internet site for the Conservatoire is being developed to provide benefits to scientists, the general public, students and children. 21 Organizational Structure

ur organizational structure makes it easy for innovation to flow across the enterprise and around the world; Oto learn directly from consumers as early as possible; and to profitably commercialize the best ideas and innovations quickly.

Global Business Units (GBUs) transfer product innovations across categories and geographic markets. Market Development Organizations (MDOs) get initiatives to local markets faster, more creatively, at less cost. And our Global Business Services (GBS) and Corporate Functions organizations leverage our size to deliver better-quality services internally at significantly lower cost to the Company.

We designed our organization to be global and local at the same time Ð a paradoxical challenge that we believe is key to our future success.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 22 Management Systems

P&G’s Management Systems ensure that the Company’s policies are implemented in a consistent manner throughout the world. These Management Systems align with the Company’s policies and promote a regular flow of information that helps the Company better manage its progress on elements of sustainable development. This section provides an overview of our Management Systems.

Human Resources Human Resources ensures that P&G has the data and following all data privacy laws. Only data employees, organizational design and work culture to needed to conduct business and provide for the deliver business productivity and to continually needs of employees will be collected. This data improve consumer, employee and shareholder value. will be protected with appropriate security systems and used only for intended purposes. Employees LINK For more information on Human Resources, please click for last will have reasonable access to data that the year’s report. Company maintains about them and will have the responsibility to maintain the accuracy of the data Employee Self-Service which they supply. P&G’s Employee Self-Service program enables employees to safely and securely manage their Harassment Policy employee data directly online, 24 hours a day. The P&G is committed to providing a harassment-free information available to employees includes: work environment that enables employees to ¥ Pay statement contribute to their highest potential. This maximizes ¥ Federal tax exemptions or filing status Ð view and the competitive advantage of our diverse work force. update We will not tolerate harassment of anyone by anyone ¥ Home address Ð including employees, suppliers, customers, ¥ Bank information - including direct deposit contractors and agencies. Every employee is expected ¥ Stock Options/Future Share accounts to be proactive in ensuring that the work environment ¥ Benefits Enrollment is free from harassment of any kind. Managers of others are responsible for setting clear expectations for Employee Privacy acceptable behavior in the workplace. P&G respects the privacy of every employee and is committed to protecting the privacy of employee

Employee Training and Development At P&G, our future business success is dependent on the excellent performance of all our people. We believe it is the responsibility of all individuals to continually develop themselves and others. We build our organization from within, promoting and rewarding people based on their contributions and performance.

P&G employees have access to a variety of training programs, from traditional classroom learning to E-learning, which includes Web-based training, computer-based training, live distance learning (virtual classrooms) and digital collaboration. Training material is delivered via a variety of methods, including the Web (Internet, intranet and extranet), audiotapes and videotapes, satellite and cable TV, and CD-ROMs.

P&G uses E-learning in many ways Ð from corporate-wide CEO webcasts, to computer application training at employees’ desks via a Web-based course, to live distance learning delivery of traditional classroom courses.

Insurance Systems The goal of the Corporate Insurance Program is to optimize the financing of insurable risks to minimize costs while providing protection from the effect of potential major loss. For more information on Insurance LINK Systems, please click for last year’s report. 23 Human and Environmental Safety Worldwide Health, Safety & Environment of our Products Systems at Manufacturing Operations Product Safety and Regulatory Affairs (PS&RA) Health, Safety and Environment (HS&E) is a global addresses issues related to products and packages. community of resources responsible for ensuring that PS&RA is responsible for ensuring that products are the approximately 130 manufacturing facilities safe for consumers, safe for the environment and in worldwide are operated safely and legally; that compliance with laws and regulations where they are process hazards are minimized or eliminated; that sold. PS&RA also addresses other environmental health risks are identified, managed or eliminated; and questions or issues about products and packages, such as that all waste from sites is reduced as much as their compatibility with waste management systems, possible. Several thousand employees spend all or a natural resource use or issues of “perceived safety.” portion of their time on HS&E management, which For more information on Human and totals more than 1,350 full-time equivalents. LINK Environmental Safety, please click for last year’s report. LINK For more information on HS&E Systems, please click for last year’s report.

Medical Systems The Global Medical community of practice advises All medical standards of performance and standard and assists management and employees in assuring a operating procedures directly flow from specific P&G safe, healthy work environment through the delivery Principles, Values and other compelling business needs. of preventive health and clinical services which optimize business contributions. Medical systems apply not only to people in manufacturing operations Beijing Red Cross but also to people in all Company operations (e.g., P&G medical systems are helping to improve lives Research & Development, Sales). as local communities learn about our science-based practices. A prominent example of this was the Global Medical manages health issues which may coverage last year that the Beijing Red Cross impact employees, technologies and brands. As P&G provided on our emergency medical care systems in is a principles-driven company, all medical system their newspaper. The Beijing Red Cross also work is undertaken in the following order of priority: arranged for one of China’s national television 1. Save a Life (Protect our People). stations, Beijing TV1 (BTV1) to broadcast a feature 2. Obey the Law (Protect Company Reputation). on the emergency care operations of our Beijing 3. Protect Key Technologies (Protect Brand Integrity). Plant. China Central TV2 (CCTV2) invited one of 4. Enhance Speed to Market (Protect Emerging our Medical First Responders to share his Technologies). experiences on one of its broadcasts. In addition, 5. Optimize Employee Productivity. our First Responders participated in training other First Responders in the local Beijing community.

Fire Protection Systems P&G operates its fire protection program on the Each facility’s program is organized and built around basic principle that each facility is unique and the following Key Elements: should have a program designed to meet its specific ¥ Protection Engineering requirements. The Insurance Division, working ¥ Maintenance and Inspections with GBU fire protection leaders and local ¥ Prevention Programs management, determines the appropriate level of ¥ Emergency Response fire protection for each P&G location. ¥ Qualified Personnel

Each facility has a fire defense profile that describes in detail the program requirements.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 24 Principal Industry & Business Associations

P&G holds membership in many industry, business and environmental associations whose activities are related to the Company’s. Below are recent changes. Europe, Middle East and Africa Latin America In 2001, P&G joined CSR-Europe. For more In 2001, there were no changes since last year. information on the organization, please see box below. LINK For a complete list, please click here. LINK For a complete list, please click here. First Latin American Conference on CSR - EUROPE Business Social Responsibility CSR-Europe is a business-driven network with the The Venezuelan State Oil Company, together with mission to help companies achieve profitability, key business organizations such as the Venezuelan sustainable growth and human progress by placing Business Council for Sustainable Development Corporate Social Responsibility (CSR) in the (CEVEDES), carried out the first Latin American mainstream of business practice. It seeks to develop Conference on Business Social Responsibility in tools and capacity-building programs of best June 2001. P&G led creation of the Venezuelan practice. It undertakes projects on specific issues, Chapter of the Business Council for Sustainable such as diversity, CSR education, measuring human Development in late 1999. P&G currently holds rights performance, etc. It works in partnership with the vice presidency of this organization. This its member companies and with the European Union conference was especially relevant because (EU) institutions. Examples include in-company Venezuela is at the dawn of a new stage in its training, stakeholder events and a European road democratic life. This requires a greater effort to show, with the support of the European successfully insert the country in the world Commission, to advocate the business case for CSR. economy to accelerate economic growth and P&G is among more than 40 member companies at overcome the poverty and ignorance that afflict its the European level, and several P&G national population. During the plenary session, P&G organizations belong to the National Partner shared its vision for how globalization helps Organisations (NPOs) in the member states. With accelerate development of the country. P&G also the strong list of members and the 15 NPOs, CSR- participated in a panel discussion of the bottom- Europe is a capable partner for dialogue with the EU line benefits of adopting sound business institutions on CSR matters, especially the responsibility practices and exemplifying how Directorates of Employment and Social Affairs, but P&G Venezuela leads United Fund activities and also the Directorates of Trade and Enterprise, and has carried out environmental education programs with the rotating EU Presidencies. among grammar school children in Caracas.

LINK For a complete list, North America In 2001, there were no changes since last year. please click here.

Global Environmental Management Initiative The Global Environmental Management Initiative (GEMI) is a nonprofit organization of leading companies dedicated to fostering environmental, health and safety and sustainable development excellence worldwide through the sharing of tools and information in order for business to help business. Through the collaborative efforts of its members, GEMI promotes a worldwide business ethic through example and leadership. P&G is a founding member and participates in several of the GEMI work groups.

GEMI’s Sustainable Development Work Group is creating a detailed and comprehensive sustainable development planning tool that can be used by a company to establish baseline performance, assess opportunities, set goals and evaluate progress against objectives. This tool should address all three aspects of sustainable development: environment, economic development and social equity.

As companies attempt to integrate sustainable development concepts into their business processes, it is critical to articulate what the desired outcome should be and how it adds value. Through use of the planning tool, companies can help identify and shape the critical issues that are important to their particular business activities.

WWW For more inormation about GEMI go to: http://www.gemi.org 25 Asia Worldwide In 2001, there were no changes since last year. In 2001, there were no changes since last year.

LINK For a complete list, LINK For a complete list, please click here. please click here.

P&G Leads Technical Training Leveraging Innovation and P&G Philippines Inc. (P&GPI) is leading the Markets for Everyone industry association Chemical Industry Group During a luncheon at the U.N. Headquarters in New (CIG) by sponsoring a technical training course for York City this past spring, the World Business government decision makers of the Environmental Council for Sustainable Development (WBCSD) Management Bureau (EMB). Through this training, released a report entitled Sustainability Through the government delegates were provided with a broad Market: Seven Keys to Success. The report, co- range of technical tools to help them evaluate Pre- authored by Chad Holliday, CEO and Chairman of Manufacture Pre-Import Notifications (PMPINs). DuPont, and John Pepper, Chairman of P&G, shows Speakers from CIG member companies shared how open, transparent markets can drive their expertise in toxicology and hazard sustainability and makes the business case for identification. P&G discussed environmental risk implementing sustainable practices. It also outlines assessment and chemical control regulations in the seven keys to successful implementation and United States and Canada. illustrates the economic advantages of doing so with real-world case studies involving some of the One of the major achievements of the training course world’s most successful companies. has been the mutual understanding between the EMB and CIG, which streamlines the PMPIN review Speaking at the event, John Pepper outlined the process by minimizing data requirements. The EMB importance of making the market work for agreed to simplify the review criteria for notified everyone. “P&G products are sold in well over chemicals in the Philippines that have already been 130 countries around the world, in remarkably approved for usage without restriction in the United different cultures and economic environments. But States, Canada, EU, Australia and Japan. we know that still only a minority of consumers in developing markets can afford our kinds of This example shows how effective collaboration products. Typically, 70 percent of the world’s between government decision makers and CIG population is left out of the market when it comes member companies can address the needs of both to the latest technology and innovation. We know government and industry. that entirely new business models must be developed if we’re to make our products accessible to the entire world Ð if we’re to truly improve the lives of the world’s consumers.”

Mr. Pepper provided examples of how P&G has contributed to improved health care by providing tuberculosis vaccinations in Africa through a UNICEF partnership and to education in China by building schools through a partnership called Project Hope, with local governments (see page 15 for more EMB participants, industry organizers and details). He also challenged the people present to resource speakers understand what a better quality of life would look like for all people in the future, and he asked them to consider how they could leverage innovation and markets for the benefit of everyone.

For the full report, go to: http://www.wbcsd.org/ WWW newscenter/reports/2001/ stm.pdf

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 26 Stakeholder Interaction

Communities Each P&G production facility has site-specific activities to build constructive relationships with local authorities, local industry associations, neighbors, local action groups, thought leaders and news media. Depending on the culture of the community in which the plant is located, this can range from regular official meetings during which new information is shared or questions are answered, to more formal meetings. This could be, for example, a reception for the immediate neighbors, where information on the past year and plans for the new year are discussed. P&G ensures continuity in community interaction by meeting regularly with local authorities to update them on plant news. In the neighborhoods of many P&G operations, the Company cooperates with and sponsors local events, so the whole area benefits from the presence of a P&G site.

P&G recognizes the importance of improving the quality of life in our local communities, and we support local initiatives and encourage employee involvement. The most valuable community support we provide usually involves not only writing a check but taking advantage of the intellectual capabilities and energy of P&G people. We look for areas where we can make a significant long-term, systemic difference. This leads us to focus heavily on education and health, with special emphasis on youth. It also leads us to build alliances with strategic partners to achieve a better result than we could alone. We look to our people on the ground to work with their local communities and government officials to learn where we can make the biggest difference.

In addition, P&G employees and retirees have a long tradition of volunteer involvement in the communities where we live. We lend a hand to those in need. We pitch in when disaster strikes. We support the arts. We support education. We invest our resources Ð and ourselves, through tens of thousands of volunteer hours Ð in our neighborhoods around the world.

Building A Great Wall of Health in the New Century When the Chinese Ministry of Health (MOH) launched a nationwide community health education program, the Safeguard brand, known for its anti- bacterial benefits, responded by sponsoring the program “Building A Great Wall of Health in the New Century.”

Through this program, Safeguard provided two million yuan ($240,000) to the Ministry of Health for development and distribution of educational pamphlets that included information on the Safeguard brand.

During the program kickoff at the symbolic Great Wall in Beijing, MOH Vice Minister Peng Yu expressed China’s appreciation of Safeguard’s effort to help China’s community health education and P&G’s generous sponsorship of China’s education and health causes. P&G Chairman John Pepper reaffirmed P&G’s commitment to improving Chinese people’s lives through superior products and contributions to worthy causes.

Always School Program P&G Pitches In to Help Feed Children In the year 2000, P&G re-launched its Always P&G Peru pitched in to help feed approximately Schools Program in Egyptian schools. As part of 1,000 children in the city of Lima. Critical cuts in the $1 million project, Always is building 50 one- the government budget forced the City of Lima to classroom schools in rural areas over a period of reduce the food supply in its largest child care ten years to help children, especially girls, pursue center. P&G Peru joined forces with private basic education. These girls usually drop out of companies (Coca-Cola, Duke Energy) to upgrade schools because their families either cannot the food supply and maintain the quality of food finance their education or because there are no for the children at an acceptable level. “girls schools” in the neighborhood. The schools consist of one classroom, where girls of different ages can pursue their education under the supervision of the Ministry of Education. 27 Authorities: Local - Regional - Global P&G communicates with local, regional and papers. Activities like these can be very important to global authorities directly, as an individual company, ensure the Company’s needs are understood and taken as well as through industry associations. Scientists and into account whenever decisions are being made that legal experts in the P&G External Relations can influence any aspect of P&G’s business. organization review existing and upcoming legislation that is relevant to the Company and work with P&G also works closely with authorities to provide authorities to ensure that policies take the needs and assistance for a variety of programs around the globe. experience of business into account. This is done via P&G provides business and scientific expertise, funding direct meetings with the authorities and comments on (either financial or donations of product) and employees’ authorities’ position papers and industry position time to a wide variety of projects.

Ace and Cholera Campaign In mid-August 2000, an outbreak of cholera was reported in Kwa-Zulu Natal, South Africa. The epidemic spread rapidly, and to date on a national basis, a total of 105,955 cases have been reported with 226 fatalities. Worst hit were the provinces characterized by a high percentage of migratory workers, poor sanitation facilities (in some instances less than 20 percent latrine coverage), and a lack of available drinking water. Environmental surveys undertaken during the epidemic indicated that a majority of rivers in the affected areas were infected with V. cholera (01 type Eltor). This was important, as First stop for the Ace team was to visit the Provincial this strain is resistant to the usual antibiotics used as Hospital at Port Shepstone, one of the worst-hit areas in treatment. Furthermore, most of the occupants of the Kwa-Zulu Natal province. Here both Ace posters and surrounding rural areas were reliant on use of these product were donated to the hospital staff to use and also streams and rivers as their only source of water. to give to patients returning to their villages after treatment. The staff of the hospital were trained on the In response to this epidemic, a multiple-pronged four steps of purifying water and how to explain this approach was adopted by health officials in an attempt information to patients. to combat the spread of cholera. One of the strategies adopted involved educating people in these areas on As the epidemic spread farther north, the Ace team good hygiene and the risks associated with drinking worked with local health authorities to donate product contaminated river water. This is where the Ace team that could be distributed in affected areas. A total of was of immediate help. A few years prior to the 5,280 liters of Ace were donated to the Gauteng outbreak, Ace had developed a water treatment provincial health authorities to use during the program that it had run in conjunction with the campaign, with emphasis on the need for educating Department of Water Affairs and Department of people about the risks of using contaminated water Health. The program consisted of several posters and how to keep their drinking water clean. developed in English, Afrikaans, Zulu and Xhosa. Two sets of posters had been developed: one set Subsequent to the cholera epidemic, health authorities identifying the four steps to purifying water, and the have accelerated their drive to educate people second listing the do’s and don’ts of good hygiene regarding clean drinking water, and there is hope that practice. Having an existing template and program, a recurrence can be prevented. Ace was able to immediately step in and offer help.

NGOs: Local - Regional - Global Scientific Community For more information, For more information, LINK please click for last year’s LINK please click for last year’s report. report.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 28 Consumers The consumer is boss at P&G. Consumers are P&G receives more than five million consumer contacts consulted at the beginning of every product’s worldwide each year through 800-line phone calls, development. In fact, even before a project is E-mails and written correspondence. Comments Ð both established, P&G technologists conduct extensive positive and negative Ð help us retain product features consumer interviews to find out what are the real consumers like and make further improvements. We’ve consumer needs, what are viewed as shortcomings in made great progress in establishing one set of current products and where needs today are unmet. standards around the world to track comments, giving us a consistent means of understanding consumer Based on this consumer understanding, new test needs, both globally and regionally. products will be developed. After screening the new test product to ensure there are no possible For example, Safeguard introduced a bow-tie shaped bar safety concerns with the formula, P&G exposes the soap in North America based on the bar’s successful test product to panels of consumers for their reception in Asia. North American consumers let us evaluation. The test product will be adapted and know they disliked it, fine-tuned to meet consumer expectations. The preferring the original adapted product will again go through safety and pillow shaped bar. legal screening to ensure it is safe and complies Acting on this with all relevant legal requirements. feedback, we reintroduced Once the product is on the market, consumers will the original. contact us with their comments on day-to-day use of the product. All over the world, P&G has Consumer Comments also give us insights into how Relations organizations where consumers can get a consumers perceive our products. Downy response to any questions or comments they may have. consumers told us the name “Premium Care” made These comments can range from product performance to them think this version carried a premium price. By aesthetics to requests for help with accidents with the changing the name to “Downy product (e.g., small children drinking liquid detergent). Enhancer,” we helped P&G Consumer Relations people are trained to give consumers understand they’re advice and background information and, where needed, getting additional performance to channel questions to other professionals to ensure the benefits at a better value. consumer is helped rapidly and effectively.

Combined Stakeholder Dialogues P&G convenes workshops, inviting scientists, regulators and NGOs to come together to discuss specific issues and to attempt to reach a common understanding. P&G gains invaluable experience from these types of interactions. These dialogues also hold great promise for frank discussions in the future. Strategic Alliance to Combat Child Malnutrition UNICEF and the P&G Nutrition Science Institute, along with other institutions that work actively in health and nutrition in Venezuela, including the National Institute of Nutrition, the Center for Research in Nutrition of the University of Carabobo, the Bengoa Foundation, and the Society of Venezuelan Pediatrics, formed a strategic alliance to combat child malnutrition. The alliance incorporates: 1) research to better understand the nutritional status of the Venezuelan population; 2) education and communication to raise awareness of the causes, consequences, and ways to prevent malnutrition; 3) sponsorship of annual scientific symposia to raise the awareness of health professionals of the nutritional status of the Venezuelan population; and 4) recognition of exceptional contributions of professionals with an annual award. The initial efforts of the alliance will focus on essential micronutrients, including iron, vitamin A, iodine and zinc.

Life Cycle Assessment Life Cycle Assessment (LCA) is a tool that can be used to assess environmental improvements, over time, of a product or service. P&G has a dedicated LCA team that supports the various business units by performing LCAs on products and processes. In addition, P&G participates in industry LCA task forces and external research projects. For example, P&G has joined OMNIITOX (Operational Models and Information Tools for Industrial Applications of Eco/Toxicological Impact Assessments), a European Union research project under the Competitive and Sustainable Growth Program. In order to identify research needs and fine-tune our OMNIITOX detergent case study, P&G invited representatives from the academic community, the chemical industry (both suppliers and competitors), authorities and NGOs to a stakeholder workshop in June 2001. P&G has opened its OMNIITOX work program for review by a wide range of outside experts and stakeholders. 29 Shareholders

Shareholders are important stakeholders at P&G. Our measure for tracking our success for shareholders P&G has 1.3 billion shares of stock outstanding. is Total Shareholder Return (TSR). TSR measures These shares are owned by large institutions and how much value our investors receive as a result of mutual funds, retirement programs, individual owning P&G stock. We track TSR against 29 investors and employees throughout the world. companies in similar industries, such as consumer, Approximately 50 percent of our shares are held by health care and beauty products. P&G tracks individuals, with nearly 20 percent held by employees performance to compensate key managers based on and retirees. We work to increase the value of P&G how well they increase shareholder value. Our stock for all our shareholders in a variety of ways, Shareholder Relations team is available every day to including growing the Company’s sales and earnings answer questions, listen to shareholder feedback and each year. provide perspective on Company decisions.

Disaster Relief Floods in Chile Early this year, several regions of Chile suffered devastating floods that left thousands of people without homes. P&G Chile helped in the relief efforts by providing 200,000 disposable diapers, 11,000 feminine pads and other products such as toilet soaps, toothpastes, shampoos and even Pringles potato chips to alleviate the suffering of the affected people. Part of the donation was delivered via a social assistance institution called “Hogar” and part was delivered directly to the city of Carol Urzua de Puente Alto, one of the cities hardest hit by the floods. El Salvador Earthquake In January 2001, El Salvador suffered its worst tragedy ever as a major earthquake rocked the entire country and totally devastated several small towns. Immediately after the disaster, P&G El Salvador confirmed that all direct employees and their families were safe. However, six indirect employees suffered serious damage to their homes, forcing them to move to shelters. We located these people and their families and helped them move to homes out of the high-risk areas by paying them two months’ rent.

In the meantime, P&G Guatemala arranged the quick transport of two container trucks carrying 2,440 cases of Magia Blanca liquid bleach and several cases of Pepto-Bismol, Vicks VapoRub and Vicks Formula 44. P&G Mexico and P&G Venezuela also delivered important product donations, such as diapers, soaps, detergents, sanitary napkins, etc. To handle the donations, P&G worked closely with the Rotary Club of San Salvador to assure effective delivery of the products to the most affected people, hospitals and shelters. Rebuilding Communities In India: A Partnership Project between SSP and P&G In January 2001, the Kutch district (Gujarat, west India) was devastated by India’s worst-ever earthquake. Damage was immense, and the loss of life and livelihood was catastrophic. The death toll exceeded 30,000 people, and more than 500,000 people were left homeless. Rebuilding lives and livelihoods along with life-support systems such as shelter, health care, schools, ration shops, water supply and sanitation, may take years.

P&G collected approximately Rs. 42 lakhs (about $90,000) from employee and Company contributions. These funds are being productively deployed in conjunction with a prominent Mumbai-based NGO, Swayam Shikshan Prayog (SSP), which has prior experience in earthquake rehabilitation work and also has an ongoing relationship with the United Nations Development Program. The project with SSP is based on developing women’s groups for long-term sustainable growth of the affected villages through capacity building, rebuilding of community infrastructure and provision of services.

As of July 2001, the project has spent Rs. 11.7 lakhs (about $25,000) for the construction of community centers and the operational costs of running the rehabilitation program, benefiting 25 villages (3,750 families, 22,500 people) in the Kutch district.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 30

Performance

P&G has developed a comprehensive system of measuring performance throughout the Company. The Company measures operational performance in order to drive continuous improvement. This approach enables the Company to report data on a wide range of operational categories. Process for Data Collection ll data are reported on a global basis unless P&G’s data collection systems are designed to be Aspecifically noted. In order to achieve simple enough so that the people closest to the work, consistency and to ensure a common understanding regardless of location, can use the tools. This throughout the organization, employees are trained in simplicity enables the Company to collect data and how to report and document data. Metric units and update systems annually at a relatively low cost. Each English are used as the business language, backed up business unit is responsible for accuracy and with local translations, where needed. consistency of the data.

To ensure the standard collection of data, the Acquisitions and Divestitures Company has the following work processes in place: All facilities that operate during the fiscal year ¥ Key terms are defined reporting period, including recent acquisitions Dr. ¥ The data to be collected are identified Johns SpinBrush and Moist Mates, reported data. ¥ Flow sheets are agreed upon regarding who collects The recent acquisition of Dr. Johns SpinBrush and data and on what systems Moist Mates didn’t materially change any of our ¥ Technically sound methods are used by performance data. For divestitures, wastes and facilities to estimate data and validate year-to-year emissions are estimated for the last year in which results they operated. ¥ Personnel are trained on the work processes, as appropriate

Major Impacts Associated with Products and Services Environmental Protection Social Responsibility Economic Development • Resource Use (Materials and Energy) • Health • Shareholder Value • Water • Hygiene • Employment • Waste and Emissions • Education • Taxes, Fees and Contributions

P&G’s products and services use resources and generate wastes and emissions. P&G is committed, through its Environmental Quality Policy, to reduce or prevent this whenever possible.

The social and economic benefits associated with P&G’s business aim to improve the lives of the world’s consumers. We do this by providing innovative technologies that represent value to our customers. We can provide employment in our communities, support the local and national economy through taxes, contributions and purchases, and increase shareholder value. By providing products and information on their appropriate use, we improve the health and hygiene of consumers through more effective and better-valued products. 31 Generally Applicable and Relevant Indicators

Environmental Protection As the diagram on the next page illustrates, P&G’s use of material resources is highly efficient. The vast majority of materials are converted to products, and the output of manufacturing waste (which is largely non- hazardous) is low. To give a more comprehensive understanding of materials used, data for packaging and manufacturing operations are provided below.

The waste summary is presented in two ways: The table below presents the data in metric tonnes by Global Business Unit (GBU). The following sections present the data graphically in an eco-efficient format; in other words, the graphs show production per resource consumed or waste generated. Graphs indicating an increasing trend show that there is an increase in efficiency of the process, i.e., less burden per unit of production.

The environmental data presented in this report (unless otherwise stated) are based WWW on the World Business Council for Sustainable Development’s eco-efficiency project. http://www.wbcsd.org/newscenter/reports/2000/MeasuringEE.pdf

Waste Generated Waste 910(830)* 879 863 57 472 140 214(134)* 27 Percent Recycled/Reused Waste 51% 55% 56% 34% 65% 62% 39% 54%

Packaging Data Worldwide, P&G has reduced the use of packaging materials by 25 percent compared to the base line of 1989/90. For the past four years, the amount of packaging materials used has consistently been below 10 percent of the total weight of product shipped. These achievements have been made possible by the use of innovative packaging technologies. We have reduced, redesigned or completely removed many different types of packages over the years.

As a result, we will not be reporting on packaging material usage this year. We will continue to monitor our packaging usage and fulfill our obligations to report our packaging material usage through many different local organizations. If the packaging material usage trend alters and weights begin to dramatically increase, we will reassess our reporting practices.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 32

Energy Eco-Efficiency Energy efficiency has remained flat over the past three years even though P&G is more than nine times more efficient (nine times production for each gigajoule used) since 1985 due to product mix and energy reduction efforts. Over the past three years, there have been slight, but not significant, changes in the mix of fuel use and electricity.

To manage energy efficiency of new projects, the Total Energy (Production Units / gigajoule) Company uses life cycle cost analysis before the 1000 projects reach the site. This analysis compares up- 800 front capital costs to the ongoing expenses. For Electricity example, spending money up front to fully insulate a 600 building is compared to the ongoing expense of Fuel heating or cooling the same building. 400 The Company also does a loss analysis at the site

Indexed vs. 1984/85 200 level. Losses are defined as anything not shipped out Base 0 the door as product, including energy use. When Year = 100 98/99 99/00 00/01 energy is identified as a major loss at a site, it receives intense focus for reduction.

Greenhouse Gas Eco-Efficiency Eco-efficiency of greenhouse gas has declined slightly Greenhouse Gas (CO ) Emissions this year. Still, the eco-efficiency indices for fiscal 2 400 (Production year 2000/01 demonstrate three times more production 350 Units per Tonne per tonne of CO emissions since 1990. There has of CO2) 2 300 been a shift from fuel combustion to electrical generation and also a shift away from fuel oil to 250 natural gas. 200 150

Indexed vs. 1990 100 In addition, the absolute CO2 emissions are still much lower than the 1990 baseline. The decrease from 1990 50 resulted from the sale of pulp mills in the United Base 0 States and Canada and the conversion of coal to Year = 100 98/99 99/00 00/01 Global natural gas in the United Kingdom and China. 33 Water Eco-Efficiency Production per unit of COD (Chemical Oxygen Demand) went up ten percent while production per wastewater consumption went down slightly. Since 1990, water eco-efficiency, or production per unit of COD, has increased 70 percent. Sites began tracking the consumption of water three years ago. Water eco-efficiency has remained steady this year. Overall, water use is up slightly even though P&G’s largest user of water, the Baby, Feminine, & Family Care Business Unit, has remained flat. Efforts are underway to develop further plans to reduce water consumed by the Family Care business. Wastewater COD Disposed Water Consumption 200 (Production 100 (Production Units per Tonnes Units per 10,000 of COD) 80 Cubic Meters) 150 60 100 40

Indexed vs. 1990 50

Indexed vs. 1998/99 20

Base 0 Base 0 Year = 100 98/99 99/00 00/01 Global Year = 100 98/99 99/00 00/01 Global

Witzenhausen Family Care Plant Water Improvements After reducing waste cost by 83 percent in fiscal year 1999/00, the Witzenhausen plant in Germany reduced fresh water consumption in fiscal year 2000/01 by 37 percent and wastewater discharge by 64 percent. This resulted in a total annual saving of $180,000 and the lowest water consumption of all P&G tissue plants. The site focus in fiscal year 2000/01 was to cut fresh water consumption and resulting wastewater discharge significantly. To take full advantage of reduced flow, the plant negotiated a contract with the local publicly owned treatment works (POTW). Since fees are based on freight weight, continued reductions would result in costs savings.

The first step was to analyze which excess chemicals were still in the wastewater. A process change was necessary to systematically reduce the identified chemicals without any impact on the finished product. To assess the potential impact, we benchmarked other 100 percent closed-loop mills. To deal with the reduced freight and volume and the resulting higher wastewater concentration, a test plan was established and agreed upon with the authorities and a neighbor company. By reducing the water consumption step-by-step and evaluating in parallel the impacts on product quality, processing ability and wastewater, parameters decreased to 0.8 - 1.0 m3 of wastewater per tonne of produced tissue. For comparison, the current average wastewater consumption per tonne in the European tissue industry is 10.6 m3 per tonne, and the lowest known consumption is 5.5 m3 per tonne. Witzenhausen is now the benchmark in P&G and the tissue industry. Experiments are ongoing to evaluate further wastewater reductions.

New Wastewater System Last year, the Shortening and Oil business at the Ivorydale Plant in Cincinnati, Ohio, U.S., upgraded its wastewater pre-treatment system. These improvements have significantly reduced waste, treatment costs, time and labor, and improved the quality of the wastewater. Previously, process wastewater from the Crisco Shortening and Oil business was treated in a series of fat traps and then discharged to the local publicly owned treatment works (POTW) for further treatment. The old fat trap system was very inefficient in removing vegetable oil and grease, and pH neutralization was unreliable, requiring continual manual intervention. The old system resulted in high biological oxygen demand (BOD) sewer charges ($1.5 million per year), and the plant experienced several pH exceedances. The old fat traps were also unsightly, difficult to maintain, and sometimes the source of offensive odors.

The initial focus of the improvement project was to reduce the worker effort required to operate and maintain the fat traps. As the project progressed, additional issues were addressed. In 2000, the four fat traps were eliminated and replaced by an oil-water coalescer and automatic pH neutralization system. This equipment is very efficient in removing oil and grease from the wastewater. The Plant’s sewer charges have been reduced due to better quality wastewater discharged to the POTW. The oil and grease removed from the wastewater is sold as a by-product, generating an income that offsets coalescer operating costs. The pH neutralization system has eliminated the pH exceedances while reducing the cost of neutralization chemicals. The new system requires less operator attention and has improved appearance and odor in the plant. The overall project savings are approximately $1 million annually.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 34 Waste Disposed Eco-Efficiency Total waste disposed is our key management measure to keep waste under control. Total waste comprises the Total Waste Disposed sum of non-hazardous and hazardous solid waste, plus 200 (Production effluent measured as COD and air emissions. This Units per Tonne measurement has been in effect since 1990. of Waste) 150 Production per unit of waste (disposed) would have increased nine percent without the one-time disposal 100 More Eco-Efficiency (>80,000 tonnes) of construction debris. With all If One-Time Demolition waste included, productivity declined 11 percent. Indexed vs. 1990 50 Waste Excluded P&G’s pollution prevention and Design Base 0 Year = 100 98/99 99/00 00/01 Global Manufacturing Waste Out programs have saved more than $500 million cumulatively in the past six years, while reducing waste production by one-third.

True Civic Spirit In Ireland, the action of P&G’s Nenagh plant to save Nenagh decided to take action. P&G agreed to make- a recycling depot has been lauded as “an example of up the funding shortfall in the amount of £75,000 true civic spirit” by a local newspaper. ($87,000) over the next three years. This has allowed the recycling depot to re-open for waste collection. The Nenagh Household Waste Recycling Depot was Additionally, the funding has enabled the depot to forced to close in 2000 due to lack of funds. This begin a curb-side collection scheme for recyclable frustrated many local residents, including employees wastes in Nenagh which will further increase the at P&G’s factory in Nenagh. quantity of waste recycled. Now P&G employees are being urged to make full use of the re-opened depot But rather than just complain about the closing of the for the recycling of glass, plastic, paper, cardboard, depot, the P&G Community Relations Team in old clothes and metal cans. 35 Social Responsibility Philanthropic Contributions P&G and its employees have a long-standing commitment to being good citizens and neighbors in all the places where we do business around the world. We believe we have a responsibility to society to use our resources Ð money, people and energy Ð wisely. We show our financial commitment through support for a wide range of educational, health, social service, cultural, civic and environmental organizations. Worldwide, P&G has a corporate contributions system in place that coordinates contributions to local communities.

Contributions made by The P&G Fund and Corporate Contributions in North America for the past three years are provided in the following table: 2000/01 1999/00 1998/99 Total $27,503,686 $28,292,768 $27,585,008 P&G’s contributions and community activities are an important part of achieving the Company’s purpose of improving the lives of the world’s consumers. During the past year, P&G through The P&G Fund has provided support to more than 1,500 organizations. Diversity Data — Global Enrollment P&G continues to focus on diversity as a global strategy and expects its work force to become increasingly more diverse. Global data on enrollment by gender are shown in the following table: Global Enrollment % Female 2000/01 1999/00 Management 34.5 34.1 All Other Employees* 38.0 39.3

Wages P&G supports paying employees a competitive wage, as benchmarked with other leading companies. Consistent with our principle of valuing personal mastery, we reward employees for improving their skills and capabilities.

Benefits P&G is a recognized leader in employee benefits. The Company’s benefits have been developed to help protect the financial security of employees. These benefits include comprehensive coverage for health care, generous vacation and holiday time, and other work/family balance benefits, including flextime, child care leave and less- than-full-time schedules.

Restructuring Fiscal 1999/2000 was a difficult year for P&G and for its many employees around the world. A strong plan was put in place to re-establish the balance between top-line revenue growth and bottom-line earnings growth. However, over the past fiscal year, we continued to face a challenging economic environment, with a slowing U.S. economy and the possibility of a recession. Key economies around the globe were also slowing Ð Japan, some countries in Europe, some of the developing markets. In order to restore P&G’s ability to compete more effectively and to grow more consistently, the previous restructuring program was expanded to further reduce overhead costs, resulting in staffing reductions across the Company.

When downsizing becomes necessary, as it did this past fiscal year, we manage employee separations in ways that are consistent with our values and principles. We maintain focus and priority on our strong commitment to the diversity of our organization. P&G uses a voluntary separation program to maximize voluntary attrition. The program includes severance pay based on years of service, continuation of health care benefits for the severance period, outplacement support services and a retraining allowance. This program is intended to provide a bridge for separating employees to retirement or employment elsewhere.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 36 Industrial Hygiene & Safety The health and safety of P&G employees are work or days of restricted activity beyond the day of paramount to the principles of the Company. injury or onset of illness. Nothing we do is worth getting hurt. Safety and health can be managed. The TIR target for sites is to be below 1.5 cases per Every illness and injury could and should have 100 employees worldwide. To achieve such rates, been prevented. programs to address employee safety such as safe Safety and health is everyone’s responsibility. behaviors, ergonomics and confined space entry have been implemented. No target has been set for LWDC The Company tracks and reports two metrics for as P&G believes it must manage incidents that worker safety: total incident rate (TIR) and total lost potentially could lead to lost workdays. workday case rate (LWDC). TIR includes all cases that result in loss of consciousness, lost workdays, The following data are based on criteria established by restriction of work or motion, medical transfer to P&G for use at all worldwide facilities. The data another job or medical treatment beyond first aid. represent all our worldwide manufacturing facilities. LWDC includes all cases that involve days away from

Total Incident Rate Lost Workday Case Rate 0.8 (Injury and 0.40 (Lost and 0.7 Illness per 100 0.35 Restricted Employees) Workday Cases 0.6 0.30 per 100 0.5 0.25 Employees) 0.4 0.20 0.3 0.15 0.2 0.10 0.1 0.05 0.0 0.00 98/99 99/00 00/01 Global 98/99 99/00 00/01 Global

2000 OSHA Results The P&G U.S. manufacturing sites and technical centers have accomplished a remarkable inspection record with the U.S. Occupational Safety and Health Administration (OSHA). In the five-year period 1996-2000, across approximately 75 U.S. sites, P&G has had only one serious citation, and total fines over the period amounted to $1,300. 37 Economic Development

Global Purchases P&G is a global company. We produce our brands in The top-line conclusions from this study indicated that approximately 130 plants in 46 countries around the P&G is in the upper part of this eight-company peer world. This year, P&G purchased more than $25 group for HS&E costs and resourcing, and in the billion in materials and services to manufacture and middle part of the group for HS&E performance. market our products. We employ locally and purchase the majority of our raw materials within those regions Specific conclusions on our performance are: where we manufacture our products. Our purchasing ¥ Fifth-lowest Injury/Illness Rate for employees professionals understand and participate in both global ¥ Fourth-lowest Lost Workday Rate for employees and local markets for the materials and services ¥ Second-lowest penalties paid (in dollars per year required to make our products. per $ billion sales) ¥ Fifth-lowest property loss (in dollars per year per HS&E Benchmarking $ billion sales) Benchmarking is an important tool to assess and ¥ The lowest HS&E operating costs (in dollars per maintain the health of P&G’s global Health, Safety & year per $ billion sales) Environment (HS&E) program. It provides Corporate HS&E staff with data to verify the robustness of our P&G shifted more HS&E work to site technicians than performance and to identify improved management any other company. This is the main reason for our and technology approaches. lower costs and need for simplified training systems.

During the past year, P&G completed a major HS&E We have similar HS&E management systems, though benchmarking study with seven other multinational our approach to information and training systems is companies. This study, led by Pilko & Associates, somewhat simpler than the norm. included BASF, Celanese Ltd., Dow Chemical Company, DuPont, Eastman Kodak, Shell Chemicals, Our HS&E performance goals are focused on and Solutia Inc. It involved a detailed review of improvement as compared to breakthrough. HS&E manufacturing and management systems/ performance. P&G’s current HS&E situation is quite positive when compared to peer companies. The long-term challenge is to continue delivering benchmark results.

P&G Cosmetics – Recipients of the Significant Achievement Award P&G Cosmetics in Hunt Valley, Maryland, U.S., is a focusing on reducing product waste by 2.3 metric second-time Businesses for the Bay award winner. tonnes per year when product needs to be reworked. P&G Cosmetics won the Significant Achievement The facility is also exploring acetone recycling, Award last year for successful modifications made to which would reduce purchases of new acetone by its production process and is being honored again 63.9 metric tonnes per year, and the potential this year for sustaining and expanding upon these replacement of acetone as a cleaning agent. This past improvements. P&G Cosmetics employs year, the facility instituted energy efficiency approximately 1,200 individuals at this facility and measures, reduced the amount of product packaging uses teams of employees to identify and implement by 83.5 metric tonnes per year, and began recycling pollution prevention projects. 18.1 metric tonnes per year of shrink wrap. In addition, it reduced the amount of fiber drum use by The team responsible for identifying source 36.7 metric tonnes per year. reduction opportunities in the nail polish production line has developed a four-tiered approach that is P&G conducts annual waste, energy and cost significantly reducing the use of acetone as a analyses, provides pollution prevention training for cleaning agent between color changes. The team has all Product Supply employees and maintains an continued to sequence the Nailslick shades from light environmental management system that meets to dark according to shade families, reducing acetone ISO 14001 criteria. P&G has been a member of use by 16.9 metric tonnes per year and has been Businesses for the Bay since 1999.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 38 Company-Specific Indicators

Environmental Protection

Non-Hazardous Solid Waste Disposed Non-Hazardous Solid Waste Disposed Overall, the non-hazardous waste disposed to landfill has 200 (Production increased this year, resulting in a 23 index point reduction in Units per Tonne) eco-efficiency (see graph). Much of the impact (80,000 150 tonnes) is from construction and demolition activities from a single site. Even though there has been an increase in 100 More waste generation, P&G has been cost efficient in Eco-Efficiency If One-Time disposing waste, saving more than $3 million in site Demolition Indexed vs. 1990 50 treatment costs. Waste Excluded

Base 0 Year = 100 98/99 99/00 00/01 Global

WIN-WIN-WIN Solution to Paper Wastes P&G Philippines Inc. (P&GPI) signed a eliminate several unit processes in its plant Recycling Service Agreement with Union Cement operations, such as shredding, transport, and Corporation (UCC). This project will allow landfilling, which incur huge service fees. On the P&GPI’s paper wastes to be recycled as other hand, UCC can now reduce its fuel alternative fuel by UCC. P&GPI’s manufacturing requirements for expensive coal by complementing plant in Cabuyao, Laguna, produces about 60 it with cheaper paper wastes. UCC is also studying metric tonnes per month of paper waste, resulting the feasibility of recycling P&GPI’s other waste from normal production line scrappings, e.g., materials with promisingly high heating values. start-up and splice rejects and quality purge. Instead of disposing of its paper wastes in the But the ultimate beneficiary of this joint project is the landfill, P&GPI will now transport these environment itself. Solid waste can be converted into materials to UCC’s cement plant in cheap alternative fuel. Ecosystems are likewise Norzagaray, Bulacan. preserved, as the need to open up new areas for landfills is minimized. Another benefit is that these Both companies are projected to realize huge cost types of alternative fuels offer relatively cleaner savings from the joint project. P&GPI can now emissions compared to traditional fuels like coal.

Hazardous Solid Waste Disposed Hazardous Solid Waste Disposed Globally, reported hazardous waste has increased 800 (Production (shown as lower eco-efficiency) due to many 700 Units per Tonne) international jurisdictions’ expanding their definitions 600 of hazardous waste. Hazardous wastes are defined by 500 regional policies and local rules and thus vary among 400 regions. 300

Indexed vs. 1990 200 In the United States, a strong focus on reduction, 100 recycling and material substitution has reduced the Base 0 amount of hazardous waste requiring disposal over the Year = 100 98/99 99/00 00/01 Global past three years. To further reduce risks, the number of approved hazardous waste disposal sites that all U.S. plants use is limited. Similar programs have been started in many regions of the world. 39 Non-Hazardous Waste Recycled Waste Recycled Recycling has been a significant effort within the 120 (Production Company to minimize impacts on the environment. Units per Tonne) The waste recycled eco-efficiency has improved by 100 eight index points over last year. This equates to a 80 recycling rate that has ranged from 51 to 55 percent 60 over the past three years and has contributed $15-20 million in revenue annually. 40 Indexed vs. 1990 20

Base 0 Year = 100 98/99 99/00 00/01 Global

Plastic Bag and Stretch Film Recycling Program Last year, P&G’s Iowa City, Iowa, U.S., plant identified a customer for plastic film and has set up a program to process plastic bags and stretch film from the distribution center.

P&G purchased a baler and received $100 per tonne for this recycled plastic. Last year, we recycled 50 tonnes for $5,000 and saved hauling and landfill fees of $2,500.

To increase savings in 2001/02, we will be expanding the program to the main plant and should have double the volume. As the main plant operation will not store the bales on site, there will be no warehouse costs and lower handling costs.

Air Eco-Efficiency Air Emissions Each site monitors total suspended particulates, 200 (Production volatile organic compounds (VOCs), carbon Units per Tonne) monoxide (CO), nitrogen oxides (NO ) and sulfur X 150 oxides (SOX). The total amount of air emissions released has decreased 28 percent, resulting in a higher eco-efficiency. 100

Indexed vs. 1990 50

Base 0 Year = 100 98/99 99/00 00/01 Global

SARA 313 Releases SARA 313 U.S. (United States only) 2000 (Total P&G facilities in the United States report annually Metric Tonnes on the release of toxic chemicals to the air, water Released or 1500 Transferred) and land. These releases are defined in the U.S. Superfund Amendments and Reauthorization Act 1000 (SARA) by the U.S. Environmental Protection Agency. The tonnes of SARA 313 releases have

Indexed vs. 1990 500 decreased this year, even though the number of chemicals being reported has increased. Base 0 Year = 100 98/99 99/00 00/01 U.S.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 40 Compliance with Laws and Regulations There are numerous health, safety and environmental Contractor and Visitor Safety requirements worldwide. Facilities are subject to Contractor and visitor safety is an important emission limits and operating requirements embodied program at P&G. P&G invests resources to ensure in these statutes, regulations, laws and permits. It is contractor and visitor safety at P&G sites. P&G’s intent to comply with both the letter and the spirit of statutes, regulations, laws and permit The Huang-Pu plant in China is focusing on requirements. Identified compliance issues are treated contractor and visitor safety because there are, seriously and all non-compliance matters are resolved on average, more than 500 contractors (1,600 as expeditiously as possible. during peak periods) working in the plant. A solid safety program for contractors and visitors The past three years’ data on environmental, is critical. Huang-Pu has developed a safety transportation and worker health and safety violations manual, scorecard system and registration and interventions follow: system to ensure safety. As a result, the plant has the leading contractor and visitor safety program in P&G Asia Beauty Care. Huang-Pu’s 2000/01 1999/00 1998/99 experience will be shared with other sites. This Number 73 48 46 will also help to develop a global program on Fines $77,070 $13,400 $33,250 contractor and visitor safety.

A breakdown of 2000/2001 Notice of Violations (NOVs) and Occupational Safety & Health Administration (OSHA) interventions follow: P&G Construction Safety Number Fines P&G contract construction operations provided a Water based 19 $120 safe working environment during fiscal year 2000/ Air based 8 $0 01. Reporting sites expended more than 16 million Solid Waste based 2 $1,000 construction effort hours. A Total Incident Rate Paperwork 7 $5,250 (TIR) of 1.06 was reported. This incident rate is Transportation based 25 $70,000 calculated as injuries per 200,000 effort hours (100 Worker Safety 12 $700 full-time employees). The corresponding Lost (OSHA U.S. Only) Time Incident Rate (LTIR) was 0.14. These results compare favorably to an OSHA Recordable Total 73 $77,070 Incident Rate of 8.21 and LTIR of 3.67 for the U.S. construction industry during calendar year 1999. The increases in fines and NOVs this year are related to transportation of hazardous materials. Plans to These excellent results allow P&G to pool sites improve performance have been developed and are with major workload and self insure Workers being implemented. Compensation and General Liability insurance. This has saved more than $27 million versus Most water-based NOVs were related to flow rate, comparable commercial insurance rates since pH, oil and grease, involving eight different sites, inception of the program in 1993. all of which discharge to municipal treatment systems. The P&G Construction Safety Network champions OSHA interventions included any employee, safe construction operations. The network includes contractor or incident that required OSHA professional safety managers from construction follow-up. Last year’s interventions also included contractors active on P&G sites. The network three routine visits or scheduled inspections. In establishes and documents best work practices, 2000, P&G received one serious citation Ð delivers construction safety training, provides a the first in four years. construction safety audit team, analyzes incident information and monitors system results. The Construction Safety Network is dedicated to an overall objective of zero incidents and has enabled continued improvement at all sites which are actively involved. 41 Social Responsibility

Performance Against Internal Standards management teams, which must address and correct P&G’s internal standards go beyond legal compliance all issues in a timely manner. and apply to all its facilities worldwide. The fundamental philosophy is to have the same standards Audits measure performance against a mandatory set worldwide, implemented by trained professionals at all sites of standards and standard operating procedures. The and audited each year using a consistent, comprehensive target performance is eight or better on a 10-point approach. The metrics used are consistent with that scale. The results have improved slightly from last philosophy. Graphs on this page describe the Health, year even though the number of sites receiving audits Safety & Environment (HS&E) performance. this year has decreased.

Audit Programs The Company takes great pride in making sure the The P&G HS&E audit programs are designed to sites are reviewed on a frequent basis. The graph ensure compliance with federal, state and local below shows percent of sites receiving an audit this regulatory requirements as well as corporate year. The lower percentage of audited sites is environmental standards and procedures. Audit attributed to the large number of new sites joining findings are reported promptly to business the Company.

Sites with Audit Scores Greater than 8.0 Sites Conducting Annual Audits 100 100

80 80

60 60

40 Percent Percent 40

20 20 0 98/99 99/00 00/01 98/99 99/00 00/01 0 Audits HS&E Fire Protection 98/99 99/00 00/01 Completed

Site Leadership Training Sites with Qualified Leaders Another key indicator of system capability is the 100 percentage of sites with trained and qualified leaders. Leadership candidates train on site for an extended 80 period prior to attending a week-long internal school where their knowledge and ability to handle special 60 situations are assessed. Only then are candidates 40 considered qualified. Currently, more than 70 percent Percent of sites worldwide have leaders qualified by corporate/ 20 GBU staffs. This has continued to improve as more of 0 the acquisition sites are qualified. 98/99 99/00 00/01 98/99 99/00 00/01 HS&E Fire Protection Web-Based Training Following A.G. Lafley’s challenge to “become a fully Web enabled company,” the Corporate Health, Safety and Environment department is in the process of developing basic training for its employees and delivering this training via the Web. The first training course, “Isolation of Hazardous Energy,” has received very positive feedback from customers. By following sound instructional design principles, conducting peer HS&E plans to develop several more courses in reviews of the material and incorporating the future. It is also pioneering the use of Long- customer feedback, HS&E has been able to Distance Learning techniques to allow learners to reduce training time by as much as 50 percent. access training materials and instructors via computer This allows better retention of the material, in (versus traveling to a class). This will amount to addition to freeing up valuable time. significant savings in travel costs.

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 42 Economic Development

t P&G, innovation is our cornerstone. Each year, we invest more than $1.7 billion in research A and development Ð the largest amount among consumer-products companies worldwide. As a result, we now have more than 27,000 patents, and we’re granted 3,000 more each year. That’s about ten every day. That’s terrific output and represents a powerful technical portfolio.

Through our Global Licensing group, we’re identifying non-strategic technologies and donating them to universities and research institutions which can more fully develop their potential. Of the 25,000 patents we currently own, we commercialize fewer than ten percent of them. Said another way, we have assets of tremendous value that the world is not fully realizing. We simply invent more than we can commercialize by ourselves.

It’s exciting to think that these donations allow all our technologies to reach their full potential, even if no longer in P&G hands. Further, each of these technology donations will foster development work at universities and research institutions, deliver whole new revenue streams to the universities and develop important new technologies that may never be commercialized otherwise. Also, the donations will give next-generation scientists and researchers real-world experience. Finally, there are tax benefits for our shareholders.

This is another example of how P&G’s talent reaches into the community. Through technology donations, we have found a new way to contribute P&G’s money, people and energies for the long-term benefit of society and education.

Technology Donations, Fiscal Year 2000 Ð 2001 Through the Technology Donations Program, P&G provides patented technologies to U.S. universities and research institutions. Donated technologies no longer fit into P&G’s strategic plans but have significant commercial potential when developed. Universities and research institutions can continue the research efforts, providing a venue for development of potential new products and technologies. This way, everyone benefits. A synopsis of the past year’s donated technologies, along with their sustainability implications, follows:

Technology Recipient Sustainability Implications

Apollo Photobleaching Technology Case Western Reserve • Developed to offer improved stain University removal from fabrics utilizing sunlight • Offers potential use in cancer therapy, utilizing the compound’s light-absorbing properties

Super Aspirin COX-2 Inhibitor Vanderbilt University • Improve the safety of medications Technology commonly taken for pain, inflammation and fever reduction • Potential for the prevention and treatment of cancer • Potential for the prevention and treatment of Alzheimer’s disease

Fiber Fabrication Technology North Carolina State University • Improved process for sorting pulp fibers during processing • Reduced need for wood pulp • Significant cost savings • Improved recycled paper products

Hair Re-Growth Technology The University of Texas • Stimulates hair re-growth Southwest Medical Center

Volatile Organic Compound (VOC) Midwest Research Institute • Low-cost, simple method to predict VOC Prediction Technology emissions from stacks 43 Supplier Diversity Program In 1972, P&G established a minority supplier program in the United States to identify and work with minority- owned businesses. At that time, P&G spent $44,000 with six minority suppliers. In 1981, the Company assigned its first full-time manager to lead and develop this effort. Today, the Supplier Diversity Program is staffed by six full-time employees who provide minority suppliers with the following assistance: ¥ An equal opportunity to do business with P&G. ¥ Coaching and feedback. ¥ Financial support, where it is needed. Supplier Diversity Spending ¥ Matches between P&G buyers and qualified 800 suppliers. 700 ¥ Timely payment. 600 ¥ Realistic and understandable specifications. 500 ¥ Development of additional opportunities with 400 other P&G vendors, including both supplier and strategic alliance opportunities. Millions $ 300 200 P&G’s purchases from minority businesses in the United 100 0 States have grown from $76 million in fiscal year 96/ 97/ 98/ 99/ 00/ 01/02 1988/89 to $578 million in fiscal 2000/01. The target 97 98 99 00 01 Target for 2001/02 is $650 million, which would account for Final year-end Supplier Diversity spending is $578 approximately six percent of P&G’s U.S. spending. million, a five percent increase vs. 1999/00.

P&G Receives Ohio 2001 Minority Business Development Award Ohio Governor Bob Taft presented The State of Ohio Most recently, this program facilitated the merger of 2001 Minority Business Development award to two minority-owned firms, Film Fabricators Inc. and P&G. The award honors corporations that advance Johnson-Bryce Corporation, to create the largest minority business development through investing, minority-owned flexible packaging company in the mentoring and breaking down barriers to success. P&G United States. P&G then awarded a $100 million has spent $3 billion in the past ten years with contract to the new entity, the Hall-Bryce Alliance, minority-owned suppliers. for its Pampers diaper business.

“We are delighted to be recognized for our P&G’s investment in minority business enterprises commitment to a diverse supplier base,” said Rob A. has resulted in ever-increasing expenditures over the Steele, president of P&G’s North America Market past ten years. Purchases from minority suppliers Development Organization. “Our programs create have risen from $85 million in fiscal year 1989/90 to jobs, provide new opportunities and most $548 million in fiscal year 1999/00. P&G is also a importantly, enable economic self-sufficiency among corporate member of the National Minority Supplier multicultural communities.” Development Council.

HS&E Program Costs There are two aspects of Health, Safety & Environment (HS&E) program costs: 1) Capital costs for new HS&E equipment 2) People and operating costs for existing facilities.

Capital costs for 2000/01 were $36 million to ensure compliance in P&G facilities, down from $68 million last year. This included the purchase and construction of pollution control equipment such as wastewater pretreatment systems and air emission controls.

HS&E total costs for operating existing sites in 2000/01 were $185 million (This does not include the $15 million in revenue gained from recycling activities.)

Environmental Liabilities P&G is also subject to contingencies pursuant to environmental laws and regulations that in the future may require the Company to take action to correct the effects on the environment of prior manufacturing and waste disposal practices. Accrued environmental liabilities for remediation and closure costs were $43 and $47 million on June 30, 2001, and 2000, respectively. In Management’s opinion, such accruals are appropriate based on existing facts and circumstances. Current year expenditures were not material.

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Sustainability in Action

Key Sustainability Focus Areas P&G’s sustainability focus continues to be Water and ¥ Doing what is right for consumers, employees, Health & Hygiene. P&G has chosen these two major shareholders and communities where it operates. areas as they are applicable across all of the ¥ Building sales and profit growth in a socially and Company’s global business units and are the core environmentally responsible manner. drivers for sustainability Ð environmental protection, ¥ Increasing diversity within its work force. social responsibility and economic development. ¥ Contributing to a more educated population. While P&G intends to focus on Water and Health & ¥ Maintaining high standards of health, safety and Hygiene, the Company will not forget its long environmental protection for its products and tradition of: operations throughout the world.

South Africa Hands-On Pregnancy Education Program aternal mortality rate in South Africa is Based on the success of M150 deaths per 100,000 live births. For the level of the Hands-On program, economic development in the country, this figure is the DoH has asked that exceptionally high (22 times higher than some the program be made developed countries). South Africa’s women are 12 times available to everyone. more likely to die from complications during pregnancy The rollout of a national than their European/U.S. counterparts. The five main Hands-On program has causes of maternal mortality are non-pregnancy related now begun. sepsis, hypertension, obstetric hemorrhage, pregnancy ¥ Phase 1: Roll-out and related sepsis, and pre-existing maternal disease. evaluation of the program at Provincial The Hands-On program was developed to educate and Test sites [2001] empower couples to make the right decisions for ¥ Phase 2: Expansion to themselves and their unborn babies, and to contribute 1,500 strategic towards reducing the maternal mortality rate. hospitals throughout Education is essential in reducing some of the factors the country [2002] responsible for the high maternal/pre-natal morbidity ¥ Phase 3: Target the and mortality rates in the country. The Hands-On remaining public program consists of six training files (Teaching Adult clinics and hospitals Education; Keeping Women Healthy During via mobile clinics or on-site implementation [2003] Pregnancy; Warning Signs in Pregnancy; Childbirth ¥ Phase 4: Update program content [2002 and & Labor; Breastfeeding; Baby Care ), teaching aids ongoing] and posters. Pampers has led a fundraising campaign among Last year Pampers and the South African Department of industry to raise ZAR 1 million ($122,000) to provide Health (DoH) jointly developed the Hands-On program. 1,500 clinics and hospitals with the program. Pampers This program was rolled out at eight test sites in both has also established a nonprofit organization to ensure rural and urban public hospitals and clinics. appropriate management of these funds. The World Health Organization (WHO) is supporting the This year saw completion of the pilot study. Midwives program and has already provided funding that reported that patients who experienced this program not enables the program to be rolled out at the provincial only understood the correct time to go to the hospital, but test sites. WHO has also committed to support and also understood and listened during the labor process. Also, provide additional long-term funding for national roll- they did not hide symptoms for fear they had done out of the program. something wrong, and they were extremely cooperative. 45 Women’s Health

The P&G Alliance for Women’s Landmark Study In The New England Well-Being Provides Information Journal of Medicine Showed Actonel and Inspiration Reduced the Risk of Hip Fracture In P&G has always been committed to Elderly Women With Osteoporosis addressing the health and This study, published February 1, 2001, showed that personal care needs of women. the osteoporosis medication risedronate, marketed As part of this commitment, by P&G as Actonel, significantly reduced the risk of The P&G Alliance for hip fracture in elderly women with osteoporosis. Women’s Well-Being* Importantly, risedronate reduced hip fracture risk by continues to support the up to 60 percent in women with more severe Speaking of Women’s osteoporosis. Health Foundation, a nonprofit organization Dr. Michael McClung, M.D., Director, Oregon dedicated to educating women to make informed Osteoporosis Center, lead author of the study, said, decisions about their health, well-being and safety. “For these elderly women with osteoporosis, this study showed that risedronate was a highly effective Speaking of Women’s Health began as a one-day medication that helped prevent hip fractures.” conference in Cincinnati in 1996 and has now grown to more than 35 conferences nationwide, reaching This landmark study, more than 20,000 women this year. Conferences are known as the Hip one- to five-day events featuring seminars, exhibits, Intervention Program workshops and social activities. The goal is to (HIP), was the first provide women a friendly, sociable and non- prospective clinical trial intimidating atmosphere where they can enjoy to evaluate, as a primary speakers, workshops and exhibits about important endpoint, a drug’s ability health topics, including osteoporosis. New this year, to reduce hip fracture risk. Hip fractures can be in celebration of Black History Month, Speaking of extremely debilitating. According to the National Women’s Health and The P&G Fund presented a Institutes of Health, one in five osteoporosis patients special conference for minority women, “Universal dies within a year of a hip fracture. Even those who Sisters Ð Inspiration for Your Health & Soul,” to survive a hip fracture can suffer serious consequences. inspire and empower attendees with a fun-filled and One-third of patients require placement in a nursing uplifting event. In addition to these educational home after suffering a fracture. objectives, Speaking of Women’s Health conferences raise funds to promote women’s health and honor The HIP study involved more than 9,300 elderly individuals who are committed to women’s health women from 183 clinical sites worldwide. Patients and well-being. were enrolled into two groups: (1) women age 70 to 79 who had low bone-mineral density at the hip, The Speaking of Women’s Health Foundation also which classified them as having confirmed awards scholarships and grants to organizations that osteoporosis and (2) women age 80 and older having enhance the quality of life and well-being of women, one or more non-skeletal risk factors such as an as well as support women’s health research and unsteady gait or difficulty rising from a chair. education through Community Investment Programs. In the first group, the incidence of hip fracture was * The P&G Alliance includes: Actonel, Asacol, Cover only 2.3 percent among women taking risedronate, Girl, Crest, Metamucil, Olay, Pantene, Secret and ThermaCare. compared with 5.7 percent among women taking placebo. The risk of hip fracture was not reduced in Additional information about the the second group of women who did not have WWW Speaking of Women’s Health confirmed osteoporosis. Foundation is available at: Additional information about Actonel is http//www.speakingofwomenshealth.com WWW available at: http//www.actonel.com

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 46 Women’s Health (continued...)

Secret To Self-Esteem Program Feminine Care School Program Enters Third Year Provides Global Health Education The mission of the Secret to Self-Esteem Program is to help young girls become strong women by building self-esteem. In 1998, P&G’s Secret anti- perspirant and The Partnership for Women’s Health at Columbia University created the program with the objective of providing teen girls with the practical skills and solutions to build healthy self-esteem.

This year, the program will reach thousands of teen girls. The Secret to Self-Esteem Symposium P&G’s Feminine Care businesses sponsor health- kicked off this education school programs in more than 55 year’s program in Austin, Texas. Dr. Ann countries around the world. Each year, these Kearney-Cooke, a leading authority on adolescent programs educate and provide product samples to issues, provided information to seventh- and approximately 13 million girls. Developed from eighth-grade girls and their parents and mentors global research with input from consultants, about the importance of healthy self-esteem in qualified professionals present age-appropriate young women and how to achieve it. In addition, information about growth and development. A break-out sessions were held where female role variety of material is available to match the needs of models shared practical skills and tools girls can the audience, including student worksheets, video employ to develop healthy self-esteem. This presentations, interactive games, posters, student year’s presenters included the Director of the workshops and low-literacy materials, which National Aeronautics and Space Administration’s communicate key messages via illustrations. The Equal Opportunity Office, Estella Hernandez program is provided to schools without cost. Gillette; L. A. Sparks center Lisa Leslie, a member of the gold medal-winning 2000 Olympic For additional information about P&G’s women’s basketball team; diver and 2000 WWW program for teenage girls, see: Olympic gold medal winner Laura Wilkinson; http://www.beinggirl.com Houston Comets basketball forward Tina Thompson; 2000 Olympic gold medal winner in softball Michelle Smith; and 1992 Olympic silver medal track star Sandra Farmer-Patrick.

The Secret to Self-Esteem Program also sponsors a nationwide essay contest and scholarship program designed to recognize girls who exemplify feminine strength. The Grand Prize winner and her essay were featured in the June issues of both Seventeen magazine and Ladies Home Journal.

For additional information about the Secret to Self-Esteem Program, including “10 WWW Tips for Healthy Self-Esteem,” access http://www.secretstrength.com 47

P&G Helps Save the Water Vole Integrated Waste Management: In the northeast United A Life-Cycle Inventory Kingdom, P&G sites are A new edition of the book sponsoring a three-year “Integrated Solid Waste program to help save an Management: A Life-Cycle endangered species, the Inventory” by Drs. Forbes water vole. McDougall, Peter White, Marina Franke and Peter Hindle Support in Year One has of P&G was launched in funded a project manager Brussels during the European to assess the presence of Commission’s Green Week in water voles around the April. The first edition, referenced in the latest region. In Years Two and U.K. Waste Strategy, outlined the concept of Three, there will be many opportunities for P&G Integrated Solid Waste Management and proposed people to get involved in educating land owners and the use of Life-Cycle Assessment (LCA) tools to businesses on how to create wildlife corridors to assess the sustainability of municipal solid waste maintain the type of habitat crucial to survival of the management systems. The new edition provides water vole. case studies from India, the United States and Europe of municipalities that have taken an Here is an extract from the survey results by the water integrated approach to solid waste management. vole project manager: Other case studies from Europe, Latin America and the United States demonstrate where LCA tools “There are literally hundreds of water courses here have been used to assess integrated solid waste in the North of England, and it was not possible to management systems and highlight key learnings study them all. There is always the possibility that from the use of such tools, including the U.K. water voles were on the next stream down, just Environment Agency’s WISARD software and the outside the set survey length, or that bad weather U.S. Environmental Protection Agency’s Decision had removed signs. The lack of signs places doubt Support Tool. The book also provides a new in your mind whether they have colonized the area. computer LCA program (IWM-2) for waste Ten to 15 years ago, water voles were a common managers and decision makers. sight, but they have disappeared. “This book tackles the complex subject of Guidance cards have been produced regarding current achieving more sustainable waste management and legislation and management regimes for waterside explains it clearly and in a way that holds the work, as well as identification cards showing the interest throughout. The software that comes with differences between water voles and brown rats. It is this book is easy to use and is a must for anyone hoped machinery operators carrying out waterside interested in integrated waste management systems. management will use these in future. Urban Talking about sustainable waste management is all development plans used to show future development very well, but unless we put the information and in regions will have areas marked where water voles life-cycle thinking in the hands of waste managers were found to be present. Planning departments will with tools like IWM-2, the strategies we develop be given these so they can consider developments that are in danger of being less sustainable than those will have minimum impact on colonies. Water voles they replace. IWM-2 will help to turn the concept of are still under threat, and work still needs to continue. integrated waste management into reality.” — Terry Coleman, U.K. Environment Agency. Colonies are still isolated, and it is essential to link these populations to prevent inbreeding and risk of For the book, go to: extinction and increase territorial space.” WWW http://www.blackwell-science.com/ ~cgilib/bookpage.bin?File=10013342

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Go, Give & Grow Sharing Leadership Skills With Schools In a groundbreaking development, P&G has joined More than 300 head teachers and senior staff in forces with the World Health Organization (WHO) to Surrey, southern England, have taken up P&G’s offer a limited number of P&G new hires the offer of free leadership seminars. The aim is to opportunity of a lifetime Ð to participate in a share and reapply business leadership skills to the pioneering pilot program to take responsibility and education sector. give something back to society. The seminars define and measure leadership and The European P&G new hires have been offered fully provide practical coaching. The idea for the funded placements with the WHO as part of P&G’s seminars originally came from a meeting with P&G Go, Give & Grow program. These individuals, who and the local Education Business Partnership. The have already accepted employment with P&G for P&G sessions have been greatly appreciated by all September 2002, will be placed on key initiatives, who have attended Ð not just the teachers but also such as the Stop Tuberculosis (TB) the trainers. program in Africa, Roll Back Malaria in Egypt and Polio Eradication in For the future, P&G will continue to offer Ethiopia. The new hires will be working leadership seminars three or four times a year, and on the programs in a number of areas. perhaps extend the training to all interested This will help them develop expertise in teachers in the region. areas such as research, marketing and management. Green Fund Campaign in Japan In an increasingly competitive In collaboration with key customers, P&G Japan recruitment environment, the unique opportunities donated 0.5 percent of its aggregate sales (up to represented by Go, Give & Grow will ensure that JPY 20 million, approximately $160,000) to the P&G continues to attract the best and brightest Green Fund, managed by the National Land candidates. This project allows P&G to offer top Afforestation Promotion Organization, the national individuals a unique chance while being consistent implementing body nominated by the Ministry for with P&G’s Statement of Purpose, Values and Agriculture, Forestry and Fisheries. Principles. Next year, P&G plans to expand the program to more recruits around the world. There The Green Fund is committed to the following have been suggestions that P&G also expand the activities: program to current employees. ¥ Forest improvement, such as conservation and improvement for private headwater forests, For further information, see: including brush cutting and thinning WWW http://www.pgcareers.com/ourculture/ ¥ Greening promotion activities, such as voluntary ggg.htm greening initiatives by local communities and youth groups, and public relations efforts ¥ International greening cooperation activities, such as by NGOs for restoring tropical forests, combating desertification and providing necessary training 49 Crest Healthy Smiles

China’s Crest Healthy Smiles Better Start for Australia’s Most Since 1995, Crest has sponsored the Ministry of Vulnerable Children Education-led nationwide Oral Health School P&G Australia has formed a partnership with Save the Education program. Every year, Crest provides Children Australia, part of the International Save the training to teachers and supplies all the educational Children Alliance, the oldest nongovernment child pamphlets, brochures, videos and other teaching rights organization in the world. The partnership is materials free of charge to help promote healthy oral known as Better Start, and it is designed to address the care habits among students in kindergartens, primary needs of Australia’s most vulnerable children. schools, middle schools and even universities. Indigenous children, urban poor children and children Over the past five years, the program has in rural and remote areas of Australia face serious benefited 30 provinces, more than 70 million disadvantages in infant mortality, poverty, housing, students in more than 600 cities and one-third of health standards and educational attainment. the rural schools in the country. To date, P&G Australia has raised Aust $240,000 (approximately $127,000) in funds and material support. These proceeds are directed towards a school- age screening program within a disadvantaged aboriginal community in remote Central Australia and a computer training center for disadvantaged children in an inner Sydney area. P&G motivated the media to support the partnership. In addition, P&G employees voluntarily raised funds through a variety of means, such as donations through salary deductions that were matched dollar-for-dollar by the Company.

Crest Healthy Smiles 2010 Crest Healthy Smiles 2010 is designed to help improve the state of oral health in America by providing education, oral care tools and increased access to dental professionals to underprivileged children and families across the country.

Prompted by U.S. Surgeon General David Satcher’s 2000 report addressing disparity in oral health in urban America, Healthy Smiles 2010 combines the passionate vision of Crest with national and local nonprofit partners and leading dental professionals to help provide healthy smiles to children nationwide.

Driven by the principle that oral health is integral to overall health, Healthy Smiles 2010 will empower local communities with programs that will improve the oral health of inner-city children and families.

For further WWW information, visit: http://www.crest.com

2 0 0 1 S U S T A I N A B I L I T Y R E P O R T 50 UNICEF and P&G P&G Spain Elected Honorary P&G Supports Child-Friendly Schools Member by UNICEF for Filipino Children The United Nations Children’s Fund (UNICEF) has P&G Philippines Inc. and UNICEF join hands in recognized P&G’s contributions to the development creating child-friendly learning conditions for and welfare of children by nominating P&G Spain 120,000 Filipino schoolchildren. as UNICEF Honorary Member. A child-friendly school is one that is effective, healthy, inclusive and protective, gender sensitive, community based and family focused. It extends into the children’s homes and communities. It tracks and brings all school-aged children in the community to school, as well as ensures they stay and learn in school. It is a school that will enable the child to develop to his or her full potential and be able to develop adaptive and positive skills to face the challenges of life.

Through P&G’s assistance, children from 34 pilot schools, their parents and their teachers began to experience the innovations of Child-Friendly School Systems (CFSS). Princess Margarita awarded P&G General Manager José Luis Navarro the diploma in recognition for The experience began with extensive training for the P&G’s humanitarian efforts for the world’s children. pilot school’s 3,100 faculty. Teachers and administrators were introduced to effective teaching The collaboration with UNICEF started in 1999, and learning processes that encourage active, when Fairy Liquid Antibac sponsored a vaccination experimental and participatory learning in campaign against tuberculosis (TB). The idea was classrooms. School health personnel were also simple but powerful: Fairy Antibac donates to trained to initiate the transformation of schools into UNICEF one vaccine for each bottle sold. healthy places for children. The July-September 1999 vaccination campaign CFSS also brings together schools and communities was enthusiastically supported, not only by for the master listing of school-age children in the consumers but also by retailers, leading to an community, identification of out-of-school children unprecedented success. More than 3.5 million and tracking of potential dropouts. Remedial classes vaccines were given to UNICEF for its efforts in and supplementary feeding are undertaken to reduce Senegal. This opened the door for a second dropout rates. campaign in November-December 2000 that has again been an enormous success, beating last The use of information technology, both in teacher year’s results. P&G Spain has provided 4.5 training and student learning, is another innovation million vaccines to UNICEF’s programs to with CFSS. P&G provided computer hardware, eradicate TB in developing countries. complemented by joint computer and Internet literacy training for select teachers and students. This TB is an infectious disease spreading rapidly in proved to be one of the most strategic interventions many parts of the world. Up to one percent of the in improving learning conditions and opportunities world’s population is infected with TB each year. for students. Many city schools are challenged by The World Health Organization estimates that more adverse learning conditions, such as cramped, hot than 100,000 children and about three million people and noisy classrooms, limited contract hours and die from TB each year. Most of these lives could be inadequate numbers of teachers. Information saved with one single dose of BCG (Bacillus technology can be used as an alternative form of Camille Guerin) vaccine which costs about ten cents. classroom instruction.

The Child-Friendly School System is a breakthrough approach to education and promises to give Filipino children a better chance to succeed in the future. 51 UNICEF and P&G (continued...)

P&G Malaysia/Singapore Gives Back P&G Singapore Receives to Community in a Big Way Corporate Gold Award P&G Malaysia/Singapore initiated a successful P&G Singapore was honored last year by the community project through the Open Minds program National Council of Social Services and Community Ð a fundraising activity for the educational benefit of Chest for its Open Minds program. children with mental and physical disabilities. “This is a meaningful recognition for us. The Open Minds Ð Educating All of Our Children is a Open Minds program in Malaysia/Singapore is three-year community development program our first social development program executed on targeted at the education of children with special a grand scale. Open Minds has energized our needs in Asia. The project was conceived by P&G as employees,” says K. Munusamy, Malaysia/ part of a worldwide community relations effort to Singapore’s country manager. mark the new millennium and P&G’s ongoing commitment to society. The Open Minds program in Singapore adopted the Rainbow Center, a special Through the Open Minds program, P&G education school for children with mental receives strong support from and physical disabilities, such as Down government, retailers and distributors, syndrome, cerebral palsy, and autistic media, public relations and advertising disorders. Since 1999, Open Minds has agencies, as well as internally from donated a total of $332,000 to the employees. The program is supported Rainbow Center. Part of this donation and endorsed by the Ministries of will help the Rainbow Center acquire a Education of both Malaysia and Singapore, UNICEF new school building for children with special needs. and the Ministry of National Unity & Social Development, Malaysia. Open Minds is also The Community Chest Awards were created in supported by Malaysia’s First Lady, Dr. Siti Hasmah 1984 by the National Council of Social Services, Hj. Mohd. Ali, and Singapore’s Senior Minister of Singapore, to give public recognition to State for Education, Dr. Aline Wong. corporations, community organizations and foundations which have demonstrated great Open Minds is funded through a percentage of P&G commitment and consistent support for its cause. sales during a two-month period. In addition, Open The Corporate Gold Award recognizes P&G for Minds also receives contributions from employees and the $210,000 cash donation to the Rainbow retailers. Since its launch in 1999, Open Minds has Center in 1999. The money was used to pay for contributed a total of $756,000 to the local community operational expenses of the Center. In addition, and has made lives better for children with disabilities these funds were used to purchase two temporary in Malaysia and Singapore. The money raised benefits classrooms, which minimizes the wait list, children with Down syndrome, autistic spectrum allowing 32 more children access to education. disorders and cerebral palsy. The program has helped special children obtain their own school premises, transportation through the purchase of minibuses, and materials such as computers, physical therapy equipment and music therapy equipment. The 2001 effort pledges to raise another $135,000.

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UNICEF and P&G Tackle Malnutrition With 40 percent of the world's malnourished children living in India, P&G joined hands with UNICEF to commit a minimum of $111,000 by contributing one rupee from the sale of every large pack of Ariel, Pantene, Head & Shoulders and Whisper. These funds are targeted for use in the following cities: ¥ Mumbai Ð to educate underprivileged adolescent girls on health problems and to help them with tablets for anemia prevention ¥ Jaipur Ð for day-care projects focusing on increased food intake and micronutrients for children ¥ Chennai Ð for a women's parenting network to provide information on prenatal care

Women to Mount Everest For the second time since 1999, P&G Chile has sponsored an expedition of Chilean women climbers to the Himalayan Mountains through one of its key detergent brands, Ariel. Last time, climbers Vivianne Cuq and Cristina Prieto reached the peak of the Cho Oyo Mountain. This year, P&G Chile supported an expedition called “Women to Mount Everest” to demonstrate that Chilean women can achieve whatever they put their minds to. After fighting adverse climatic conditions, three out of the four women explorers were able to reach the summit, marking an unprecedented achievement in the annals of mountain climbing. Ariel supported this project to help those brave women reach levels of excellence comparable to the excellence behind research incorporated into Chile’s detergent brands. The climbers took Ariel detergent to wash their clothes during the expedition.

WWW You can see details of the climb and a video at: http://www.himalaya.cl/videos/cumbre.mpg

Ariel Supports Children’s Education During last year’s observance of Ramadan, P&G Pakistan launched the first phase of a program to reach out to underprivileged children living in remote parts of the country. Ariel directed a portion of its profits towards educating the less privileged. In about one year, the initiative has led to regular schooling for 150 children in 35 cities who had no hopes of ever attending a school. The second phase of the program will be launched in the coming Ramadan and will continue until all 105 districts of the country are covered.

In consultation with Anwar Maqsood, a well-known Pakistani writer, the Ariel team visited various rural and semi-rural areas during the month before Ramadan to identify less privileged children. With the advent of Ramadan, Maqsood and the Ariel team started the campaign by visiting the selected areas. For each packet of Ariel detergent purchased during Ramadan, a portion of the sale was directed to funding a child’s education. Once selected, the child is provided with books and a school uniform. In addition, each child’s first five years of school fees are paid in advance.

The first beneficiary of the education drive was a boy named Imran from Korangi. He told the Ariel team that if his family had the money, he would be studying to become a pilot. Today, Imran is in a school in Korangi working his way towards his dream.

The Guardians of the Planet Convinced of the importance of protecting the environment and the great challenge this represents, P&G Mexico has developed an environmental education program, The Guardians of the Planet. This program, implemented jointly with the Mexican Ministry of Education and Ministry of Environment, is focused on the grammar school children of Mexico City. The program has three parts covering the following areas: ¥ Air Quality ¥ Water Quality ¥ Solid Waste Management, including reduce and recycle

Since the program began, the educational program on air quality has been taught in the fifth grade, reaching more than 250,000 children in Mexico City. Through P&G’s commitment to the Ministry of Education last year, new water quality education was developed and approved by the Basic Education Directorate, and taught in the third grade for the school year 2000-2001. Both parts of the program, on air quality and water quality, are again part of the current school year curriculum. This includes a Teachers’ Guide with information, suggested activities, experiments and games for the classroom. 53 Dash Goodwill Mission Projects

For the first time in their lives, people in the village of Dalocha, Ethiopia, have access to clean drinking water. The money for the project was raised by Dash Missione Bontà – 1,000 Lire for a Helping Hand.

Dash Missione Bontà year, and 23 percent die by age five. The project was ash, the leading laundry brand in Italy, has supported by Action Aid, a nonprofit organization Dbeen developing and supporting social specializing in fighting poverty and helping poor initiatives for almost 15 years. All Dash social children and families improve the quality of their plans are named Missione Bontà (Goodwill lives. This project focused on providing the Mission) and are targeted to improve the quality population with water and health assistance by of life of children. building a hospital, 15 clinics, a water reservoir, three water collectors and 16 wells. Dash Missione Bontà Ð Mille Lire Per Un Mattone (Dash Goodwill Mission Ð 1,000 Lire for a Brick) Thanks to Dash and Action Aid supporters, the took place in Kenya. The main problem in the area project now offers clean, drinkable water and of Kiongwani (150 km southeast of Nairobi) was the sanitary assistance to everyone in Dalocha, lack of infrastructure to provide children with proper especially children and pregnant women. education. The project was supported by Padri Comboniani, a missionary in Kenya, and aimed at Dash Missione Bontà - Scuola per L’Angola building a village with schools and houses. The (Dash Goodwill Mission - School for Angola) village included a clinic for basic medical assistance, took place in Angola’s Luanda and Benguela a church and a supply of water and electric power. regions. The project was supported by UNICEF and aimed at providing children with basic In a few years, the village was entirely built, education. After many years of war in these areas, consisting of about 51 buildings. Today, almost 25 percent of schools have been destroyed, and 1,300 students receive education at Kiongwani, and 58 percent of adults are illiterate. The project the infrastructure built with this project supplies provided people and materials for education: water to the entire region around Kiongwani. school kits for 250,000 children and training for 5,000 new teachers. Dash Missione Bontà Ð Mille Lire Per Un Aiuto (Dash Goodwill Mission Ð 1,000 Lire for a Helping Over the past two years, Dash Missione Bontà Hand) took place in Dalocha, Ethiopia. Dalocha is a projects moved their attention towards Italian very poor and densely populated area 180 km south children, namely with Dash Missione Bontà Ð of Addis Ababa. Only nine percent of the total Ospedale Amico. A brand new Dash campaign population has access to drinkable water. Fifteen will be launched later this year. percent of newborns do not survive after the first

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